The Motivation Of Share Repurchase Of The Listed Company And The Research On Announcement Effect

Share repurchase is the re-acquisition by a listed company of its own stock.It refers to the exchange,using cash or other methods,for a reduction in the number of shares outstanding.The first dividend policy was be implemented in American,a listed company,then being used all over the world even for China.Nowadays,in China along with a growing number of companies who declares stock buyback,there are many researches helping stakeholders to make a decision.Regarding for the repurchased shares,some are used in ESOP and some are retired to reorganize capital structure,it is worth thinking about what is the motivation of the stock repurchase in a company.Meanwhile,when stock buyback information is declared,it also needs to be considered that how's the reaction of the market and what the main board,SME and GEM concerns about it.By filtering the companies listed in Shenzhen stock exchange and Shanghai stock exchange who announced share repurchase in 2011.01-2016.06,this paper is about to prove that under some conditions,share repurchase is a good choose for companies:a undervalued stock price,a confident management team,a small percent of stock holding by general manager and after a declare of repurchase without information disclosure,the market responses well.There are discrepancies of dealing with share repurchase declaration between main board and SME board in short term market effect,but no directly difference compared with GEM board.Based on above conclusions,the suggestions are:The investors should consider the purpose of stock buyback;The listed companies should learn more knowledge about share repurchase;The government should improve relative laws;Both the market and government should supervise the normalization of SME and GEM board.