Analysis Of The Effect On Shareholder Wealth Of Stock Repurchase In Chinese Listed Companies

Stock repurchase is a wildly used dividend policy and capital operation method of listed company in Western countries,refering to a financial behavior of listed company to buy back its own outstanding shares,in order to achieve capital reduction and adjust the capital structure.In developed capital markets,stock repurchase has become an important financial activity.As stock repurchase is able to influence a company's capital structure,therefore it is an important means of listed companies to enhance the intrinsic value of the stock.In the domestic capital market,the development process of the stock repurchase is not very long,but with fewer restrictions on our stock repurchase and more and more companies involved stock repurchase will have a profound impact on the healthy development of domestic capital market.At present,China's Securities Regulatory Commission and relevant regulations have allowed listed companies to repurchase stocks,the corresponding stock repurchase is becoming an effective way of operating in the capital market by listed company.Due to restrictions by the policy,China's stock repurchase started late relatively,there are few stock repurchase instances,especially the case of stock buybacks occurred in the secondary market is scarce.Meanwhile,the theory of some foreign countries may not be entirely applicable in China.For stock repurchase,the research are mainly theoretical,although some of that involve a small number of cases,but they are still not intensively enough and not prominent to guide the stock repurchase of listed companies.Therefore this paper mainly adopts the literature analysis,theoretical analysis and case analysis combined with the cooresponding research method on J company's stock repurchase.We mainly analyze the potential reasons and purposes of J company's stock repurchase,using comparative analysis of the financial status of the company before and after the stock repurchase and the specific changes in operating performance by calculating the cumulative excess returns of J before and after the company's stock repurchase to analyze the impact of stock repurchase on short-and long-term shareholder wealth.The result shows that,through stock repurchase,J company improved the company's operating performance and financial condition,and optimized the company's ownership structure and capital structure,then delivering the value of the stock which was severely undervalued by the capital market,to enhance investors' confidence.Based on the successful implementation of J company's stock repurchase,the study concluded that when the company's stock is significantly undervalued bystock market,stock repurchase can be implemented in order to improve the company's short-term operating performance and enhance the company's stock price.But to make the stock repurchase play a more effective role in the capital market,we must continue to improve information disclosure system in our capital market.