The Analysis Of Outstanding Share Repurchases Market Effect In Chinese Security Market

Stock repurchase means that a listed company to repurchase its issued shares, which is a capital market behavior in order to achieve the reduction of capital and adjustment of capital structure. In the capital markets of the developed Western countries, there are a large number of applications in stock repurchase. It can be seen that listed companies can enhance the value of company stock through the tool of stock repurchase. With the development and improvement of China’s securities market, the Capital operation mode like stock repurchase also draws attention of China’s listed companies.A lot of researches have been conducted by foreign scholars in the1980s. Many empirical analyses have indicated that stock repurchase can produce a positive market effect. So, in such a special kind of institutional environment and background of our country, will they be able to produce such a market effect? To what extent they will be of this market effect? How should investors objectively and rationally look at this market reaction? Hence, it is of great significance to study and explore the market effect of stock repurchase from listed companies.The development process of stock repurchase in our country is relatively slow, and the case of stock repurchase is not enough both in number and representativeness. Domestic scholars mostly concentrate on the qualitative analysis for share repurchase, and the literatures of empirical analysis are not so much. Most cases of the study concentrated on stock repurchase events in earlier China’s securities market without any timeliness. Based on this situation, this paper starting from the empirical analysis, taking those after-reform listed companies’floating stock repurchase as case study, adopting the event study methodology and statistical regression analysis to conduct complete and symmetrical research for stock repurchase’s market effects and its influencing factors.This paper is divided into six chapters. Chapter one is introduction, which gives a main study background, study significance and study methods of the paper. Chapter two is literature review, which reviews the research literature of stock repurchase’s market effects and its influencing factors. Chapter three is the theoretical basis for stock repurchases, which firstly explains related theories of stock repurchase, including its definition, mode and theoretical hypothesis. Chapter four is the developing process of stock repurchase in China, and discusses its motives. Chapter five gives an empirical analysis for stock repurchase’s market effects from the listed company in China, and then explains the result and gives appropriate policy recommendations. Chapter six is the prospect of the study, analyzing its limitations, and also the outlook and expectations of the research.Research conclusions of the paper are as follows:1. Listed companies’ stock repurchase has certain market effect in China. But the market effect is mainly reflected in the interval before the repurchase announcement date. The repurchase announcement information being leaked in advance is most likely to cause the above situation.2. The main significant factors of market effects during the period of impact events:repurchase proportion and repurchase price ratio. They have a positive correlation with cumulative abnormal return, which means with higher repurchase proportion or repurchase price ratio, there will be larger market effects of stock repurchase.3. There is no obvious relationship between market effects and company’s basic factor, which means most investors in stock market do not lay emphasis on long-term investment, and pay little attention to company’s basic value, but concentrate on short-term price fluctuation in stock market, hoping to obtain capital gain through it.