The Effect Of Stock Repurchase To Listed Company

Since China implementing equity division reform in 2005,the stock repurchase has been applied in the listed companies of our country gradually.In August 2012,BAOSTEEL announced to spend 5 billion yuan on stock repurchase,becoming a hot spot in the capital market.This stock repurchase was the largest in scale.And BAOSTEEL belongs to state-owned enterprises,so analyzing its repurchase behavior can offer some reference for other listed companies in China.On the basis of the above considerations,This paper analyzes BAOSTEEL's company background and the motivation of stock repurchase firstly.Second,using the event study method to study BAOSTEEL's short-term maket performance and long-term market performance.Then combined with the annual report,analyzing its financial performance before and after the stock repuuchase.Based on above,the research conclusions of this paper are as follow:Duing to investors approving the repurchase decision,the short-term market performance has better pperformance,which reducing the free cash flow and agency costs,thereby increasing shareholder wealth.But in terms of long term market performance,it can be seen that there was always a negative abnormal returns during the two years after the anauncement showed by BHAR.The long-term performance of the market needs to be supported by its operating performance,but the company's operating performance did not improved radically.Overall,the development of iron and steel enterprises affected by the overall industry downturn heavily,steel enterprises which want to have a better future also need to find another profit growth point.