An Empirical Research On Market Reaction To Share Repurchases Announcement And Its Determinants For The Listed Companies In China

Share repurchases originated from USA have been widely used since 1980s.It is an alternative form of dividend payout policy and capital operation for the listed companies in western countries.Compared with developed western countries,China develops slowly in share repurchases.Confronted with many difficulties,listed companies in China are in need of various financial policies.Therefore,it is of great significance to promote the awareness and understanding of share repurchases.This study examines the market reaction to share repurchases announcement and its determinants for the listed companies in China with event study and multivariate regression.This paper uses a sample of announcements from 2005 to 2008,and finds a positive reaction to the announcements.Further,the market reaction is still positive across the repurchase targets and firm size.In addition,multivariate regression results state that idle cash and operation cash flow to current liablities are significantly negatively associated with the market reaction to the announcement,whereas market to book ratio has a significant positive association.Seven chapters are included in this paper as follows:Chapter 1:Introduction.Research background,research framework and research strengthes are discussed briefly in this chapter.Chapter 2:Literature Review.A review of theories of share repurchases,market reaction to share repurchases announcement and its determinants.Chapter 3:A review of the Institutional Background of Share Repurchases in China.Chapter 4:Research Hypotheses.Hypotheses are developed on the market reaction to share repurchase announcement and its determinants.Chapter 5:Research design.Data collection and model development are presented.Chapter 6:Empirical Results and Discussion.Empirical results of univariate analysis and multivariate regression analysis are discussed.Robustness checks are conducted as well. Chapter 7:Conclusions and limitations.Main conclusions and research limitations are discussed as well as future research.