Research On The Motivations And Economic Consequences Of Listed Companies Stock Repurchase

Stock repurchase originated in Western capitalist countries and is widely used as an important means of capital operation.Due to historical reasons,Chinese stock repurchase started relatively late and relevant laws and regulations need to be further improved.2014 to 2018 was the peak period of stock repurchases in China,and the number of companies implementing stock repurchase had increased steadily.The stock price continued to decline in 2015.To change this situation,the Securities Regulatory Commission put forward the requirement of "five choices one",which promoted the rapid development of stock repurchase.In 2018,the Chinese stock market once again showed the phenomenon of thousands of stocks falling.To increase company's share price,share repurchase was pushed to a climax as a self-help measure.In recent years,because stock repurchases have been favored by listed companies in China,many companies have attempted to raise the company's stock price through stock repurchases,when stock prices continue to fall.Based on China's special economic environment,the motivations for stock repurchase of listed companies are gradually diversified.At the same time,the stock repurchase motivations also have obvious Chinese characteristics,and some companies even have hidden motivations.Therefore,in the era of stock repurchase in China,it is particularly important to study the motivations and the economic consequences of stock repurchases.At present,Chinese scholars have studied stock repurchase of listed companies mostly using a single case.To enable company's managements and investors to rationally understand the economic consequences of stock repurchase.This paper chooses Guangbo Group Co.,Ltd and Montnets Rongxin Technology Group Co.,Ltd,and uses “Contrastive Analysis”,“Financial Indicator Analysis”,and “Event Study” to research on stock repurchase motivations and the economic consequences.Through analysis,the following problems are found: First,Guangbo Group's stock repurchase didn't prevent the company's stock price from falling,but Montnets Rongxin Technology Group's stock repurchase effectively stabilized the company's stock price.Second,the accumulated excess return rate of Guangbo Group during the window period continued to be negative,while Montnets Rongxin Technology Group generated positive excess returns for investors during the window period.Third,after the implementation of the stock repurchase,Guangbo Group's operational capacity and profitability declined.Although the solvency increased,it was still at a low level.After the implementation of the stock repurchase,Montnets Rongxin Technology Group's operational capability and profitability improved.Although the solvency declined,it was still at a high level.Due to different market environments,major shareholder's behavior,company's financial situation,stock repurchase plans and investor's psychology,Guangbo Group and Montnets Rongxin Technology Group had different economic consequences.Finally,some inspirations are drawn from the problems in the case study,hoping to bring some references to managements and investors.