A Study On The Motivation And Effects Of Share Repurchase In Listed Companies

In the 1980 s,the economic recession in Western countries caused the share prices of many companies to fall and faced the risk of hostile acquisitions.In order to ensure that corporate control was not seized,many companies used the share buyback method to optimize the capital structure.In recent years,the capital market in China has been sluggish,and more and more listed companies have carried out share buybacks.Therefore,the motivation and effect of buybacks have become a hot spot for scholars to study.In this paper,we choose the Markor International Home Furnishings Co.,Ltd.that completed the share repurchase in 2018 as the case object,and use the event research method,factor analysis method,financial index analysis method and so on to study the motivation and effect of share repurchase.Firstly,this paper introduces the background,significance and knowledge of share buyback,so as to lay a good theoretical foundation for the paper.Based on the theory of EPS hypothesis,financial leverage hypothesis and signal transmission hypothesis,this paper analyzes the real reasons for the share repurchase of Markor International Home Furnishings Co.,Ltd.In view of the effect of share repurchase,this paper studies the announcement effect and financial effect respectively.Using the event research method to study the announcement effect,it was found that the excess rate of return and the excess cumulative rate of return of Markor International Home Furnishings Co.,Ltd.had positive returns on the announcement day,and the excess rate of return tended to flatten out compared with the pre-repurchase period,which shows that the short-term market effect is positive.The buyback has helped raise share prices.This paper analyzes the positive and negative effects of this repurchase on business activities and financial situation by means of financial index analysis.In addition,12 financial indicators were selected for the comprehensive performance evaluation of Markor International Home Furnishings Co.,Ltd.It was found that the overall performance score of Markor was reduced due to negative factors such as the negative impact of the market environment and the large reduction of its own funds.Although the repurchase optimizes the capital structure of Merck Home,the repurchase leads to increased financial risk and payment risk,and the overall performance score has a declining trend,indicating that the negative financial effect brought by this repurchase is greater than the positive financial effect.Finally,through the case study of Markor,the author puts forward several enlightenment that we should combine various payment means with moderate repurchase,strengthen investor education,and standardize the disclosure of share repurchase information.This paper aims to provide theoretical support for the company to carry out share buyback under the condition that the capital market continues to be depressed and the stock price fluctuates irrationally.