A Case Study Of Midea Group’s Share Repurchase

In August 2015,China Securities Regulatory Commission and other four governmental ministries jointly issued the Notice on Encouraging Listed Companies to Merge and Restructure,Cash Dividend and Share Repurchase,in order to encourage and support listed companies to use share repurchase and other capital operation methods to promote the enterprise value.On 9 November 2018,the Securities Regulatory Commission,the Ministry of Finance and SASAC jointly issued the Opinions on Supporting the Repurchase of Shares by Listed Companies,which clearly supported the implementation of the rules of stock repurchase and enhancement of the company’s risk management ability.In recent years,with the improvement of China’s capital market and the increasing number of share repurchase cases,the theoretical research on stock repurchase is also deepening.It is of great significance to study the motive of repurchase,the design of scheme and the effect of repurchase on the maintenance of market value of listed companies.Based on the Signal Theory and Agent Theory,the essay made an analysis to the motivation of stock repurchase,the financial effect of stock repurchase and the shareholder wealth effect by using the methods of literature study,case study and event study,and studies whether stock repurchase can maintain the company’s market value and success.In order to provide an alternative way of dividend distribution for listed companies and help to improve the capital structure of the company.The essay use Midea Group as the research object,which is divided into five parts: Chapter I is the introduction,which introduces the research background,research significance,domestic and foreign research literature review,research content and methods.Chapter II is the introduction of the case,which reviews the case from the industry background,repurchase process and market results of the Midea Group.Chapter III is a case study analysis,which validates the decision-making motivation of stock repurchase from the aspects of motivation,scheme and effect of Midea Group’s stock repurchase,and make a study on the effect of stock repurchase from the perspective of company value.Chapter IV is the case enlightenment,which is on the basis of the previous case analysis and draws inspiration from the perspective of company management to the research of stock repurchase of listed companies.Finally,the essay summarizes the conclusions of the case study and prospects for future research in this academic field.The essay draws the following conclusions from the case of stock repurchase of listed companies:(1)The main motivation of stock repurchase of Midea Group is to maintain the market value of the company,realize the substitution of cash dividend and improve the capital structure.(2)According to the plan of Midea Group’s stock repurchase,the plan of stock repurchase is matched the motive of stock repurchase.(3)The financial effect of stock repurchase is conducive to the promotion of earnings per share and the improvement of capital structure in the short term.Shareholder wealth effect of the stock repurchase shows that stock repurchase sends a positive signal to the outside world to stimulate the rise of stock prices and enhance the confidence of market investors.But in the long run,the impact of stock repurchase on the financial effect of Midea Group is limited.The Midea Group’s share repurchase case study provides reference and experience of share repurchase for other companies to maintain market value management and effective implementation.