The Research On Market Reaction To Stock Repurchase Announcement Of Listed Companies In China And Its Influencing Factors

It is undeniable that share-repurchase plays an increasingly important role in the company's management and the standardization of China's capital markets as a capital operation method. Macro, share-repurchase contributed to the split share structure reform which would further improve China's capital market. Also share-repurchase was conducive to the orderly and efficient operation of China capital market, and made an inventory of state-owned assets to achieve the strategic adjustment of state-owned assets. Micro, reduction of state-owned shares and legal person shares improves the ownership structure of companies, which will help companies improve their management. Simultaneously, stock-repurchase improves companies'asset- structure, which is conducive to the role financial leverage plays. Although share-repurchase in China started late and related systems still have deficiencies, but these won't prevent share-repurchase from growing rapidly as one of the important management tools in China.In the recent past, domestic scholars have obtained some achievement in the research of share-repurchase, but mainly focused on early repurchases of state-owned shares, and research on the open-market repurchase of shares is little. Due to late starting, the split share structure and other reasons, our study has some shortcomings, and studies have not been well reflected the present situation of China's capital market with the completion of split share reform and the increase in the number of stock buy-back.In this paper, event study, comparative study and multiple regression analysis will be used to explore the reaction of market to share-repurchase announcements of China's listed companies and the influencing factors of market-reaction. First, use event study to analysis stock price performance before and after the share repurchase announcements; then, use comparative study to analysis stock price performance with the release of announcements with different standards, such as sources of funds used in repurchases. Finally, use multiple regression analysis method to find out influencing factors of market-reaction. Study shows that: 1, China's A-share market reacted positively to the share-repurchases announcements; 2, stock price of companies which released repurchase announcements during the share reform period, used directional repurchase, repurchased in exchange of assets or released repurchase announcements released together with share reform announcement rose first, then fall, while stock price of companies which released repurchase announcements after stock reform completed, used centralized auction repurchase, repurchased in cash or released repurchase announcements alone performed poor firstly, then began changing for the better market performance one to two days before the announcement and never fell after announcement released; 3, after announcement date , stock price of companies which repurchased stocks in cash or released repurchase announcements alone performed significantly better than that of companies which repurchased stocks in assets or released repurchase announcements together with stock reform announcements; 4, empirical testing shows market reaction to repurchase announcements is negative with ROE and company size, but has a positive correlation with the proportion of repurchase and the time repurchase announcement released.