A Study On Market Reaction To Share Repurchases Announcement And Its Determinants For Companies

Since 1970 s,the stock repurchase tool was born in the US.It has been developed for 50 years.Now it has become one of the key tools in the global market.In recent years,the share repurchase scale have expanded rapidly in our country.Since 2015,the number of stock repurchase in our capital markets has increased significantly due to the sharp decline in the stock market,when share repurchases were often used as a tool for stabilize share prices and prevent systemic risk.From August 2017,China's stock market has once again set off a repurchase tide,with 954 enterprises issuing repurchase plans in 2017-2018 and the repurchase size has reached to the top in that period.Therefore,this paper study the announcement effect and influencing factors of repurchase under the current backgrounds is totally siginificant.Which can provide a important reference for companies and help the investors to realized their target better.Futhermore,it can also promote the development of the capital market in China.The paper focus on the announcement effect and the influencing factors of share repurchase under the current backgrounds.In the part of empirical analysis,the paper selected 51 companies as my research samples and adopted the event study method to analyze the AR and CAR generated by the sample in the window of [-10,15].The results has verified the hypothesis that the stock repurchase can produce strong positive market announcement effect in the short term.At the same time,the paper also adopteds the multiple regression analysis method and collected some important data to analyze the direct correlation between these data and the announcement effect of share repurchase.The results implies that the ratio of repurchase,the ratio of assets to liabilities,the growth rate of revenue,the price-to-book ratio and the source of repurchase funds have a significant positive correlation with the market announcement effect produced by repurchase,while the total assets and the investor sentiment has no correlation with the announcement effect.In addition,this paper selects a typical enterprise of the pharmaceutical industry,Kunming Pharmaceutical to do a concrete research.This part mainly analyzes the real motivation of the repurchase and the impact on the financial aspect of the company when the repurchase finished.It shows that although the share repurchase can optimize the capital structure,but it cannot fundamentally reverse the market downturn.trend.According to the conclusion of this paper,we can puts forward the following suggestions for companies,investors and relative departments:Firstly,companies should strengthen the compliance of share repurchase and not rely on stock buybacks to push the stock price,the right way is that pay more attention to the improvement of their own profitability.Secondly,Investors should be sensible and avoid blindly investing.Thirdly,the regulatory departments should adjust and improve the relevant regulations of stock repurchase for it can be better used.