Research On The Effect Of SINBON Pharmaceutical's Stock Repurchase

A share repurchase is a decision by a listed company to buy back its own shares from the secondary market through the way such as centralized bidding and Fixed-price tender offers,thereby reducing the number of outstanding shares.As it has the effect of boosting the company's stock price,optimizing the capital structure,reducing agency costs and replacing cash dividends,it has gained the favor of management and been used more frequently in the capital market.Therefore,the study of share repurchase cases of listed companies has a positive practical significance for the its development in China.First,the paper expounds the research background and researching actuality of share repurchase at home and abroad for providing ideas for the study of stock repurchase.Then,it introduces the concept of share repurchase,repurchase effect and other related theories,and it clearly identifies the research content.After that,the author deeply analyzes the share repurchase case of Guizhou Xinbang Pharmaceutical Co.,Ltd.This is because the total amount of funds used for repurchase ranks second among the pharmaceutical manufacturing enterprises that implemented stock repurchase in 2017.The amount of repurchase in this case has exceed 2% total equity of the company,which makes it a representative case in reflecting the characteristics of stock repurchase in our country at the present stage.In the case study of Xinbang Pharmaceutical Stock Repurchase,the author will first analyze the motivation of share repurchase based on the background of this transaction.Then,the influence of Xinbang Pharmaceutical Share Repurchase will be analyzed from market effect and financial effect.Through this research,the author found that,in the terms of market effect,although share repurchase increased Xinbang's share price in the short run,its impact is not ideal in the long run.In terms of financial effect,share repurchase increased earnings per share,reduced weighted average capital cost,relieved the pressure of cash dividend payment,strengthened the company image in stock market and increased the firm value.However,the large consume of cash in stock buyback impaired the short-term solvency of the corporation,thereby increasing its payment pressure.At the end of the paper,in accordance with the conclusions of case study,the author will put forward some suggestions on how to better carry out stock repurchase for listed companies.