Research On The Motivation And Market Effect Of Stock Repurchase Under The Background Of New Company Law

In order to adapt to the development of the capital market and the changes of the market environment,on October 26,2018,the sixth meeting of the Standing Committee of the 13 th people’s Congress decided to adopt the revision of the new company law,which mainly made more perfect provisions for the existing share repurchase system,,further relax the situation of share buyback by simplifying the procedures of share repurchase and regulating the company’s share repurchase behavior of share buyback.With the implement of relevant supporting policies,the repurchase enthusiasm of listed companies began to rise continuously,and a number of leading enterprises issued a large share repurchase progress announcement,both the amount and number of repurchase companies have increased significantly.In this context,the motivation and market effect of stock repurchase have become the main concern of the investors.Therefore,this paper uses the event of Ping An stock buyback as example.Based on the literature review and the actual situation of the case company,this paper analyzes the motivation of the listed company under the background of the new company law to carry out the stock repurchase and the market effect caused by the repurchase,improve the efficiency of the use of idle funds,establish a long-term incentive mechanism and consolidate the right of control.After analyzing the case,this paper comes to the following conclusions:(1)the main purpose of China Ping An’s stock buyback is to improve the stock price,improve the use efficiency of idle funds,establish a long-term effective equity incentive mechanism and consolidate the control right.(2)By analyzing the effect of stock buyback,this paper further verifies the buyback motivation of China Ping An.And the market effect shows that stock repurchase has sent positive signals to the market,enhanced investors’ confidence and stabilized the company’s stock price.Through this case,this paper provides a reference for other listed companies that plan to carry out share buyback.