Research On The Interplay Between Stock Repurchase And Stock Liquidity

As a way of financial assets operating during capital market evolved to a certain level now,stock repurchase has its special advantages comparing with other ways.For important function of stabilizing capital markets and promoting financial innovation,it is favored by financial and capital markets.One of the factors closely related to the stock repurchase is stock liquidity.As a concept of market's aspect,stock liquidity has been the basis and vitality of security market.The stand or fall of liquidity reflects favor extent to a stock by the market,but also illustrates the operational economical status.Review the history of China's stock repurchase,due to the time of introduction of stock repurchase is comparatively late,combined with the policy and market transformation and other reasons,the stock repurchase fails to gain adequate development.However,along with the development and improvement of our market economy,the domestic market gradually integrated international market,and Chinese security market further improved,we firmly believe that the stock repurchase also will certainly become a common way of capital operation among the listed company in our country.Since 2010,despite the rapidly rising around 2015,the Chinese stock market is in a downturn period.Especially in late June,2015 "Stock Market Crash " was a sudden,which added to the burden of the capital market operation.During this period,the Commission requires all listed companies to develop plans to maintain a stable stock price,including stocks lessening,holdings and stock repurchase three initiatives.Therefore,during the period,there are many events of listed companies repurchasing their stocks,while the stock price and stock liquidity are closely linked,there is a certain relationship between the repurchase and liquidity.Therefore,it is necessary to investigate and analyze the mechanism of action between stock repurchase and liquidity during the stock market downturn in order to provide policy guidance for capital operation of listed company in our country.According to the previous research and analysis,the domestic scholars mainly studied on the motivation of stock repurchase,the market reaction to the announcement,and the impact on firm performance,especially paid very sufficient attention on repurchase motivations and financial effect.There is little literature studied interaction effect between the stock repurchase and liquidity.Therefore,based on the above reasons,this thesis is based on the basic theory of finance,on the basis of existing researches,emphatically studies the interaction effect between the stock repurchase and liquidity.The first part will introduce the background,significance,innovation of the research and ideas and framework of the thesis.The second part will discuss relevant researches in the field of repurchase and liquidity by the domestic and overseas scholars,and do some comparative analysis.The third part based on the relative theory of finance on stock repurchase and liquidity,and contact with current capital market economy status in our country,and then put forward to the research hypothesis in this paper.The fourth part will cover the sample selection and variable set.In accordance with the sample criteria,selecting stock repurchases events from January 2010 to June 2016 of as the research sample.Fifth part will use instrumental variable,generalized method of moments(GMM)method and multiple regression analysis to make an empirical analysis of the selected stock repurchase events,in order to demonstrate that during the period of the stock market downturn,it is difficult to improve the stock liquidity by stock repurchase,in other words,stock repurchase of listed companies will lower liquidity of stock.And the companys whose the level of cash earnings are high,their liquidity will reduce more significant.In addition,for the stock on the verge of depleting liquidity,the company will take stock repurchase to support share price falling as well as reduce the cost of the repurchase,this phenomenon is more obvious to the company of low cash surplus of the sample,and discusses what causes the empirical results.At last,the paper puts forward the corresponding suggestions for the research conclusions.