Analysis Of Financial Effect Of Share Repurchases

Stock repurchase is a common capital operating method in the western capital market. As a way of equity contraction,stock repurchase involves capital structure and dividend policies of listed corporations thus it can improve their internal stock value. With the economic reform more and more deep in our country,the sub-owned shares has become a large obstacle to further development of our stock market as well as making our listed corporate governance perfect. In order to promote the reform,China Securities Regulatory Commission allows listed corporations to repurchase circulated stocks. The corporations immediately respond to repurchase stock. Therefore,studying the financial effect of share repurchases has active meaning.This paper is divided into five sections to explain mainly from the theoretical study and the financial effect of share repurchase. First , mainly introduce the basic theories on share repurchase, sums up the current stock repurchase at home and abroad on the theoretical study of the situation and introduce the background of share repurchase. In chapter two, to introduce the concept of the share repurchase, classification and the common share repurchase ways. The chapter three is analysis of financial effect of share repurchases, mainly from financial leverage effects, dividend substitution effects ,financial objectives effects, and the negative financial effects. The chapter four is the application and share repurchase prospects in China through analysis occurred share repurchase cases. In the chapter five , give the proposals related to Chinese share repurchase. The last part of the conclusions and shortcomings ,conclusions were discussed based the author's understanding of the share repurchase.