The Research Of The Market Effect Of Stock Repurchase In Chinese Listed Companies

Even though, stock repurchase took place since stock market was established in China, the theoretical study and empirical research are not thorough. By adopting event studying method, this paper analyzed all the repurchase cases happened in Chinese stock market from 2004 to 2009.Firstly, this thesis gave an overview of all the literatures about stock repurchase. And the emphasis was on the market effect of stock repurchase. Secondly, a review of stock repurchases theory and the history of stock repurchase in China was introduced. Then based on the theory of signaling, an empirical study of the stock repurchases in Chinese Listed Companies was conducted. Using event-study methodology, this paper analyzed the market effect of stock repurchases announced on the Mainland (Shanghai and Shenzhen) stock markets from 2004 to 2009. The study result showed that a positive market effect existed after the repurchase announcement, and it also suggested that information was leaked before the repurchase announcement. In addition, this paper divided the announcements into different categories according to different repurchase purposes and found that companies with different motivations all got positive abnormal returns. And the study of long term market effect showed that investors reacted rationally to stock repurchase announcements.