An Ampirical Research On The Wealth Effect Of Share Repurchases In China

Stock repurchase is also called share repurchase. It refers that the listed companies purchase their own shares from their market at a certain price by free cash or debt financing. With the improvement of the capital market in our country, the listed companies which acts as the independent legal entities of the companies and the main part of the market gradually realize the influence of the stock repurchase on them. Concretely speaking, it can maximize the share holders' wealth effect though its influence on the administration structure, capital structure and dividend policies. Therefore, the listed companies gradually take stock repurchase as their means and tools of capital operation. Stock repurchase can bring share holders and companies wealth effect. The following are the main aspects:1. Stock repurchase can optimize the capital structure.2. Stock purchase can transfer good news to the market. It means that the share prices may have been undervalued or the companies are powerful. This will strengthen the investors' confidence and the share price of the companies will increase. Then the maximization aim of the fixed wealth effect will be achieved.3. Stock repurchase can reduce the share holders'tax burden and then increase their wealth.4. Stock repurchase can help create good market environment for the reform of share distribution.Nowadays, the research direction of stock repurchase is becoming concreting and deepening. At the same time, the national backgrounds are more featured with characteristics of times and social marketing economy. Therefore, the research on stock repurchase in China should be combined with its national conditions. Since stock repurchase of company and shareholder to produce wealth effect, which factors company will when they decide to prepare for the stock repurchases? What effect do these influence factors for company and shareholder wealth? Based on the previous research and stock repurchases laws in China, where else needs to improve and perfect? This paper will explore. Based on the basis of study, the research methods of this paper are as follows:1. The literature research. Based on the existing domestic stock repurchases, and summarized the research results, this results supply the clues and thinking for this paper; 2. The empirical research methods (regression analysis). Correlation research is an empirical research method. This paper builds two linear models respectively about the wealth effect of the shareholder and the company, and analyze the degree, the nature characteristic and the methods and so on which will influnce the wealth effect using SPSS16.03. Induction and deduction. Summarize and conclude the empirical results and provide some reasonable suggestions.The main content of this article are as follows:Chapter one is introduction. It mainly introduces the research background and significance, related document review and comment, research approach and content and its creative points. Chapter two is summarization of stock repurchase. It mainly some basic theories of stock repurchase, including its concept, types, methods, and motivation as well as basic models. Chapter three is empirical approach on wealth effect of stock repurchase on listed companies. It mainly analyzes the influential factors of stock repurchase on wealth effect of share holders and listed companies respectively. And then it comes to conclusion though hypothesis, setting up models, descriptive statistical analysis and regression analysis. Chapter four is the conclusion and outlook of the thesis. It elaborates the research conclusion and future outlook of the thesis and gives some suggestions to the listed companies in our country. Combined with the research conclusion it summarizes the best operation prepared for stock repurchase.Based on the research on stock repurchase both at home and abroad, this thesis is different from the past ones. Its creations are as follows:1. It sets up linear regression models (LMR) that influence the factors of wealth effect of share holders and companies respectively. The LMR of the factors of company wealth effect use price balance in the market as explaining variable instead of price change in the past. After check, the degree of fitting is relatively good.2. It quantizes the undervaluing degree of share price and checks its influence on the value of companies.3. It considers the factors of not only repurchase ratio, repurchase price, repurchase period, profit capacity, financial leverage and share nature but also the competition degree, company size and release place of shares.This deficiency reflects in:1. Small sample size. Although the large span sample selection, but because the relevant legal system of share buyback is unsound, and the number of the company which repurchased its stock is limited in capital market, even some of deficited datas, resulting in less effective sample number. At last, empirical research results with different expectations.2. For the wealth effect of the stock repurchase, this article only analyze it from microcosmic factors, without considering the profession characteristic, inflation and the government macro economic policies, so the influence of factors has certain limitation.3. In the course of the study, the writer found that the stock repurchase often occurs together with share-trading reform. but due to the time and energy, The writer don't do the in-depth study.