| Stock repurchase has become a common option for public companies,especially in western countries,to achieve the reduction of excess cash reserves or adjustment of capital structure.It is a capital market behavior which can be done via using either firm?s own cash flow or capital raised by debt financing.With the development of China?s security market,stock repurchase has been attached with great attention by the listed firms.The reform of shareholder structure in 2005 brought China?s capital market to the full-circulation era.The Chinese government have released a series of documents and supplementary regulations to regulate the market during the past decade,which would guarantee the rights of shareholders and public companies.More specifically,those documents or regulations includes forcing listed firms to make detailed plans of the shareholding increase of large shareholders,stock repurchase,employee shareholding and stock option incentive.The announcement and implement of stock repurchase send a positive signal that the firm?s current profitability is not temporary and the high-level is confident about firm?s future.Since stock repurchase will stabilizethe market and restore the confidence of investors,the researches on market effects and financial influences of stock repurchase would help market regulators further comprehend how it works so that they can regulate the market with the help of it.This paper uses the ?Case Study? method to analysis the motivations,market effects and financial influences of stock repurchase.Moreover,?Event Study? is applied on the study of repurchases in 2014 and 2016,respectively.This essay confirms the average abnormal return increases after the event due to the information incentive by successfully separating the information incentive and effect of supply& demand,which is creative.This paper also managed to prove the existence of cross-market information incentive and offer considerable political suggestion to the problems in the case. |
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