The Empirical Analysis Of The Market Reaction To Share Repurchases Of The China's Listed Companies

In foreign markets, share repurchase is a mature market tool. The using of this tool acts an important pole in companies' capital exercise, finance management and working activities. Because of the limit of market environment and laws, share repurchase develops slowly in our country. 2005, China Securities Regulatory Commission promulgated "regulation rules of listed companies repurchasing tradable shares", which indicated that the China's listed companies' share repurchases entered a new era.Chin's share repurchases can be divided into two types: tradable share repurchase and intradable share repurchase. This paper studied the both types with event study measure and regression analysis measure. The overall conclusion that the paper draws is as follows: First, the tradable share repurchase announcements have fortune effects. In a longer time before and after the announcements, there are notable aggregate abnormal returns in the market. Second, the announced size of the repurchase program and Price per Book Value are strongly associated with the magnitude of announcement returns. Third, comparing the performance in the year of announcing repurchase and the performance in the former year and in the subsequent year, we can find that listed companies announce repurchase programs when the performance is in the bad low point. Forth, the intradable share repurchase announcements also have fortune effects. In a longer time before and after the announcements, there are prodigious aggregate abnormal returns in the market. Fifth, as a good event, intradable share repurchases have no substitute effects to the cost of Split Share Structure Reform. Last, the market reaction of intradable share repurchase announcements is stronger than the market reaction of tradable share repurchase announcements. This is because of the difference of uncertainty and the repurchase magnitude. Intradable share repurchase is more certain than tradable share repurchase, and its repurchase magnitude is bigger than that of tradable share repurchase.