Research On The Effect Of Stock Repurchase In Chinese Listed Companies

Stock repurchase, as an important financial tool, has been widely employed in mature stock markets. Through stock repurchase, a listed company may adjust the irrational equity structure, capital structure, correct the stock price deviation from actual value, prevent hostile takeover. With the law control of stock repurchases relaxing and the reform of splitting share structure, more and more firms have begun to conduct stock repurchases. This provides an opportunity for studying stock repurchases in China.The thesis includes six chapters. Chapter1makes a brief introduction of research background, significance, methods, and innovative points. Chapter2gives an overview of the domestic and international literatures about stock repurchase. In Chapter3, By introducing the history of domestic stock repurchase, the author try to find the reasons why there are few listed company makes repurchase in capital market. In Chapter4, the author systematically summarizes the motivations on stock repurchases, and then points out the differences in the motivations from Chinese listed companies to foreign listed companies. Chapter5is the most important part. In this part, using event-study methodology, this thesis analyzed the market effect of stock repurchases announced in the mainland stock markets from2005-2011. The study shows that a positive market effect appeared in the event window of repurchase announcement. Furthermore, the repurchases with various motivations have different market effect. In the last Chapter, the author summarizes the whole thesis and gives some suggestions.