An Empirical Study On The Motivation And Effect Of Stock Repurchase Of Listed Companies

Stock repurchase,as a means of capital operation,appears more and more frequently in China's stock market in recent years.What is the purpose of stock repurchase by listed companies?Whether the stock price is undervalued or the company's free cash flow is too abundant;whether managers are overconfident or large shareholders have other purposes.What is the reaction of the stock market before and after the implementation of the stock buyback?Strengthening the research on these problems is.not only of great benefit to the rational and effective use of capital operation means by listed companies,but also of great significance for promoting the healthy development of capital markets and scientific investment decision-making by investors.Based on the theories of stock price undervaluation hypothesis,wealth transfer hypothesis,management incentive hypothesis and so on,this paper studies the motivation of stock repurchase of listed companies in China,and further explores the market reaction of listed companies before and after stock repurchase.In the empirical study,2548 listed companies that have completed stock buyback are selected as the event samples for analysis.For what purpose will listed companies conduct stock buybacks,In this paper,we choose the ratio of stock repurchase(RMA)as the explanatory variable to study the motivation of stock repurchase,take PB,CASH,MC as the explanatory variable,and LEV,SIZE as the control variable to verify it.To explore whether China's listed companies are different from the western capitalist countries in buybacks.In response to the market reaction after the announcement of stock repurchase,this paper observes the change of stock price of the listed company which is engaged in stock repurchase in the event window.ACR and ACAR are used to judge the effect of stock repurchase before and after stock repurchase.The research shows that the signaling hypothesis is also applicable to our country,which shows that raising the stock price through stock repurchase is one of the motivations of stock repurchase in listed companies.The hypothesis of money capital is proved,that is,the less money the enterprise holds,the more likely the enterprise will enter the stock repurchase,which shows that the free cash flow hypothesis is not applicable in the stock market of our country.The more confident the managers are,the more they think their stock price is not undervalued,and the more stock repurchase is just a way of capital operation that will not have any effect on the implementation of the stock repurchase of the enterprise.The more confident the manager is,the more he thinks that the stock price of his company is not undervalued.Through the comparative analysis of ACR and ACAR,it was found that ACAR showed a positive change direction during the period of event day[0,2],but showed negative ACAR,in the next few days until the end of the event day.Therefore,it is speculated that there may be insider trading in China's capital market,which is related to the imperfect information disclosure system and regulatory system in China's capital market.Based on the above-mentioned research,this study proposes:(1)investors should not blindly follow the trend when making investments,and should analyze in detail the specific causes of stock repurchase of listed companies before investing.Ensure that they make rational investments.(2)for those listed companies that are prepared to make stock repurchase,they should strengthen their understanding of the strategic way of stock repurchase,and use theory to make up for the lack of understanding of the concept of stock repurchase.Finally,the relevant theoretical knowledge can be effectively applied to the repo event.(3)with the continuous maturity of the securities market,the corresponding laws and regulations should be improved in time.This requires regulatory departments to continue to strengthen the management of information disclosure.