Research On Market Reaction To Stock Repurchase Announcement In China

Stocks repurchase means listed companies repurchase its issued shares in orderto get the goal of declining capital and adjusting stocks structure. Stocks repurchasecould improve the value via changing the capital structure or dividend policy. Withthe development of our security market, stocks repurchase acting as capital operatingmethod gradually is attached the importance by listed companies; what’s more, somecompanies have adapted this kind of capital operating method successfully. Especiallyafter implementing non-tradable shares reform, security market of our country entriesinto total current age. At the same year, the governance made clearly definition for thestocks purchase. In2013,the country issued some policies about Stocks repurchase.The article firstly introduces the background and meanings of the research. Thenintroduce the history of stocks purchase and analyses the motivation and currentsituation of stocks repurchase of our country, finds out of the reasons of leading to thiscurrent situation from external and internal environment. Then discuss the influencingfactors of market effect of stocks repurchase from stocks repurchase, growth,profitability, cash flow, understatement of price, financial leverage. The study provesstocks repurchase could occur positive effect before issuing the events. Thisphenomenon indicates stocks repurchase could convey good news but it is known bysome people advance. The research also find repurchase ratio, cash flow, financialleverage are evidently relevant to the market effect of stocks repurchase. Hencegovernance of listed company should consider these factors before deciding stocksrepurchase in order to avoid price falling. Finally the article suggests that ourcompany should take some measures to complete the system of stock repurchase.