Analysis On The Motivation And Financial Effect Of Stock Repurchase Of Listed Companies

Stock repurchase refers to the behavior of listed companies for stabilizing stock price and equity incentive,and using company's own cash or financing capital to recover company's stock and reduce the number of shares outside the company.Stock repurchase originates from western developed capitalist countries and is regarded as an important tool for the operation of the company's capital.Different from the western developed capitalist countries,the stock repurchase is late because of the late start of the securities market in China.Early stock repurchase is closely related to the split share structure reform.With the deepening of reform and opening up,China's securities market is becoming more and more mature,and the way of stock repurchase is also enriched.In 2015,China's household electrical appliances industry suffered a cold winter,and several household electrical appliances companies carried out stock repurchase,hoping to promote the price rise and stabilize the market expectations.Among them,the American group,as a home appliance giant,has also implemented the capital operation of stock repurchase.Selection of Midea Group has two meanings: practical significance as the research object,first,beauty itself has an important position in the home appliance industry,is a representative of the study;second,the Media group for the trade-off between stock repurchase funds and investment in research and development funds is worth studying.The theoretical significance,compared with foreign research results of the stock repurchase,the research on stock repurchase is still not rich,the Media group stock repurchase as a case,using the real data as the basis for the analysis,analysis of causes,the financial effect on the current stage of China's stock repurchase will be valuable.This article mainly uses the literature research method,the theory induction and the case analysis method to analyze the stock repurchase case of Midea Group.This paper first reviews the literature about stock repurchase,and then introduces the meaning,mode and type of stock repurchase,and the theoretical basis of stock repurchase.Then,the motivation hypothesis and the financial effect hypothesis of stock repurchase are applied to analyze and discuss the motivation and financial effect of the repurchase of the United States group respectively.Finally,we draw the conclusion and Enlightenment of the group case of the United States.In actual operation,according to the different motives of repurchase,the types of stock repurchase are divided into two kinds of dividend repo and strategic repurchase.Among them,the strategic repurchase is divided into further subdivided into new capital type repurchase,reverse repurchase and active passive profit type repurchase.According to the actual situation of listed companies usually repurchase repurchase price repurchase,location,source of funds is different,the stock repurchase is mainly divided into four categories: one is based on the stock repurchase in different locations,divided into public venue OTC repurchase and repurchase agreements;two is determined according to the repurchase price is different,can be divided into fixed price offer repurchase and Holland auction three repurchase repurchase;according to different sources of funds,can be divided into debt repurchase,repurchase and repurchase cash mixed;the four is based on whether the stock repurchase of transferable right to sell,can be divided into transferable and non transferable stock repurchase stock repurchase.The motivation of the repurchase is the essential starting point of the stock repurchase of the listed companies,and is also an important reference factor for the investors to make the right choice.The main reasons for repurchase include: effectively promoting the company's share price,helping to achieve the equity incentive plan,improving the company's dividend policy,optimizing the company's capital structure,and preventing the company's hostile takeover.Stock repurchase will bring a certain financial effect to the company: repo reduces the circulation of the stock,and will improve the market.The earnings per share is expected to bring up the price of shares;stock repurchase will reduce the owner's rights and interests,so as to improve the financial leverage,and achieve the optimal capital structure;stock repurchase can increase the control rights of large shareholders,raise the stock price in order to prevent a hostile takeover;the stock repurchase can replace cash dividend,resulting in tax saving effect.But a company's stock repurchase may also have a negative financial effect: repurchase may damage the rights and interests of small shareholders and creditors,which may increase the company's financial risk and payment risk,and may convey signals that the company lacks opportunities for growth.In the second half of 2015,the stock market began to fall irrational,the US group was affected by the economic environment,and the stock price fell straight.In order to promote the rise in stock prices,stabilize the market expectations and convey the company's confidence in future performance,the Media group bought stock repurchases in July 2015.Based on the beauty of the group's equity,operating conditions,the overall financial situation based on a comprehensive understanding of the situation,the industry situation,the combination of Midea Group to make stock repurchase decisions when the status of the securities market and national policy changes,analysis of the main motivation that the Media group to implement stock repurchase: maintaining price reasonable valuation,reduce agency cost,regulate the financial leverage and the substitution of cash dividend policy.In this paper,through the analysis of abnormal return and cumulative abnormal return rate of the two indicators that Midea Group stock repurchase to enhance shareholder wealth;in addition,improve the company's net income per share repurchase;stock repurchase reduced cash dividends and financial pressure,increase the flexibility of the financial stock repurchase;reduce the company's cost of capital.Improve the proportion of liabilities.Meanwhile,Midea Group Stock Repurchase also triggered a negative financial effect: the long-term effect of repurchase to raise stock price is not obvious;it increases the payment risk of the Media group,and damages the interests of minority shareholders to a certain extent.It can be seen that the stock repurchase of the United States has the advantages and disadvantages of the share repurchase.According to the financial data,Midea Group company announcements and financial news,analyze the main reasons and the financial effect of Midea Group to implement stock repurchase,draw the following four conclusions: stock price stability is the main motive for the implementation of Midea Group stock repurchase stock repurchase,but based on the long-term effect of stock price is not obvious;repurchase the profit distribution policy of Midea Group Stock Repurchase more perfect;with advantages and disadvantages,the Media group should be careful to choose whether to implement the necessary means of capital operation.In this paper,the case of the stock repurchase plan of the company to other enlightenment: the listed companies should strengthen the understanding of the stock repurchase,or repo can not change the long-term price trend;listed companies should fully understand the advantages and disadvantages of the stock repurchase,the repurchase plan formulated in accordance with the situation,the risk aversion of stock repurchase;listed company between large and small shareholders interests cautious,reasonably determine the stock repurchase price;capital market supervision departments should strengthen the management of stock repurchase repurchase information disclosure,to ensure the authenticity of the information,to prevent the leakage of information in advance and insider trading,and improve the treasury stock system,facilitate listed companies more flexible use of the stock repurchase a means of capital operation.