An Empirical Research Of The Effect Of Stock Repurchase On Listed Corporation Shareholder Wealth

Stock repurchase is the listed company to repurchase its own shares outstanding, inorder to achieve the purpose of capital reduction and the adjusted capital structure of acompany way of managing money, is widely used in developed capital market, sharerepurchases as A share capital of contraction involving the listed company’s capitalstructure and dividend distribution policy,Therefore is one of the important means toincrease the intrinsic value of the stock listed companies,The history of the stockrepurchase on the foreign stock markets have been50or60years, Institutional maturity,Foreign scholars on the stock repurchase more than of research, The history of thedevelopment of the domestic stock repurchase shorter and more restrictive, In2005,Regulatory Commission issued the Measures for the Administration of the shares of thelisted companies repurchase of public office, Clear a path to the repurchase of shares oflisted companies, The legislative paradigm shift from the principle prohibitingexception license "public shares buy-back is no longer limited to,in oct, Company Lawamendments to the relevant provisions of the repurchase, This stock repurchase in ourcountry has begun to enter the law, regulate the new stage of development, With thecontinuous relaxation of the conditions of Chinese stock repurchase, Listed companies,investors gradually became aware of the special role in the capital markets of the stockrepurchase, Thus stock repurchase to achieve business goals more and more listedcompanies, By a single event and has developed into a mass incidents, more and morescholars study the stock repurchase, Study and discussion of theoretical and practicalquestions about the repurchase of shares of listed companies, to promote thedevelopment and innovation of China’s capital market and listed companies has apositive meaning.Scholars of the stock repurchase motives, primarily from the repurchaseannouncement market reaction and the market reaction to the degree of the impactfactors three angles，This paper studies on Whether the stock repurchase will impactshareholder wealth, First, from a theoretical point of view, to explain many of the listedcompanies in China to select a stock repurchase motivation, And analysis of the impactof stock repurchase shareholder wealth Underlying assumptions are based on signaltheory, asymmetric information theory, agency theory, etc. Secondly, an empiricalanalysis uses event study methodology. To explain the reaction of our stock repurchasemarket, and proved the assumption. Positive wealth effect of stock repurchases to shareholders wealth listed companies through share repurchases to increase shareholderwealth. Specific conclusions as follows(1)The paper analyzes the motive of stock repurchase in the listed companies andthe influence on shareholder wealth brought by stock repurchase theoretically. Thestudy shows that stock repurchase conveys the underestimated information of stockprices to the investors, elevates the expectations of the investors on the companies’future. In addition, the announcement of stock repurchase can bring positive wealtheffect to the stockholders. The listed companies boost the company’s financial leverageratio, optimize the company’s capital structure by making use of stock repurchase so asto promote the companies’ value. Besides, stock repurchase can reduce the companies’agency cost, which avoids the waste caused by the internal conflicts of the companiesand increases the stockholders’ wealth to some degree. Stock repurchase can replacecash dividend to achieve the goal of tax avoidance for the stockholders as well aselevate the stockholders’ value. On top of that, stock repurchase can help the managersavoid paying cash dividends to the stockholders continuously, which ensures theflexibility of the listed companies’ finance.(2)The paper takes as the samples the listed companies announcing stockrepurchase in the period from January in2008to December in2012of the main boardlisted companies in the Shanghai and Shenzhen Stock Exchange. The paper tests theinfluence on the stockholders’ wealth of stock repurchase announcement by adoptingevent study method. The study shows that the stock repurchase announcement can earnthe stockholders extra profits on the announcement day. In addition, the wealth effect ofstock repurchase announcement is remarkably positive three days before and after theannouncement day, that is between the interval of [-1,1], which means that the marketholds a positive response to stock repurchase and the stock repurchase can bring thestockholders with positive wealth. Evidence also shows that AAR is positive severaldays before the announcement day. Moreover, AAR is highly remarkable, whichmanifests the phenomenon of disclosing stock repurchase before the announcement inour country.(3)In accordance with the conclusions made by the paper, some suggestions aboutthe policies are put forward. When the stock prices are underestimated, the relevantsectors should encourage the listed companies to implement stock repurchase to delivera positive signal to the stock market so as to boost the stockholders’ wealth. The listedcompanies should select a reasonable proportion to carry out stock repurchase, which can therefore optimize equity structure. At the same time, the relevant sectors shouldregulate the information disclosure system of stock repurchase to promote the healthydevelopment of stock repurchase of the listed companies in our country.This paper is divided into five parts, the first part is an introduction, presented theresearch background, research ideas, and the structure of the paper. The second part is aliterature review consists of three sections, a literature review of the wealth effect. Forthe stock repurchase, stock repurchase impact on shareholder wealth Research andLiterature Review. The third part is the analysis of the impact about the stock repurchaseof shareholder wealth, is the theoretical analysis part of this article, divided into foursections, introduced the definition of the stock repurchase regulations, the motivation,the financial impact, the impact on shareholders’ wealth,and reasoning to draw twoassumptions, the first is: The listed company declares share repurchase, shareholderscan get the positive wealth effect, the second is listed company declared the wealtheffect of share repurchase shareholders and repurchase stock. The fourth part is theempirical part of this article, including sample selection of empirical research, variabledesign, empirical results and conclusions of the empirical analysis using descriptiveanalysis, univariate analyzes and multivariate regression analysis. The fifth part of theconclusions and policy recommendations, summed up the conclusions of this study, therelevant recommendations for improvement based on the conclusions, and pointed outthat the lack of this study.