Effect Of Repurchase Of Shares Of Listed Companies On The Company's Financial Performance

Stock repurchase refers to the funds acquired by listed companies by using their own funds or other financing channels to repurchase their stocks in the market,which reduces the number of stocks circulating outside the company,so as to promote the stock price or use them for equity incentives.It first appeared in developed western countries,in the 1970s,when the western capitalist economy fell into a "stagflation" situation.In order to stimulate economic development,the U.S.government promulgated many provisions to restrict listed companies to pay dividends to shareholders.But out of the attitude of being responsible to shareholders,listed companies will not blindly invest,and will allocate them to shareholders when there is no good investment project.In this case,because the government restricted the listed companies to pay dividends,and did not dare to invest freely in the economic downturn,they chose to buy a part of the shares issued outside,which reduced the number of shares issued outside,and increased the dividends in another way.This practice was slowly followed by many countries.In the 1980s,hostile takeovers sprang up in the United States.Share prices fell sharply.In order to stabilize stock prices and stop people from falling into the panic of Black Monday,many companies have adopted stock repurchase methods to make stock prices rise.Since then,stock repurchase has gradually become an important means for enterprises to stabilize stock prices and improve dividend distribution.The government has also issued many policies and regulations to further improve it.Compared with the West,stock repurchase in China started late and developed imperfectly,and there are many legal restrictions.However,this also makes stock repurchase show different characteristics in China.Unlike the West,China mainly improves the capital structure of state-owned enterprises and optimizes the governance model of enterprises.This is because our country encouraged the reform of state-owned enterprises and advocated the self-financing of state-owned enterprises.After the Third Plenary Session of the Eleventh Central Committee,China changed from a planned economy to a market economy,established the Shanghai Stock Exchange and the Shenzhen Stock Exchange,and joint-stock enterprises appeared.However,there are many problems in the initial stage of joint-stock enterprises,such as the "dominant share" of state-owned shares,the lack of enterprises' own funds,the scarcity of financing channels,and the restrictions on stock repurchase,which have become obstacles to stock repurchase.In 1992,the big Yu Garden adopted the first stock buyback in the history of our country by adopting the merger and acquisition of all the small Yu Garden shares.However,this case of stock repurchase is dominated by the government,which has a strong color of government intervention.Unlike the stock repurchase in Western countries,it lacks market participation and has no commercial value.In 1994,unlike the share repurchase under previous government intervention,Lujiazui repurchased state shares by agreement.Moreover,the number of circulating shares of B shares has been increased,and the proportion of circulating shares has been greatly increased.This stock repurchase is aimed at improving the unscientific ownership structure of the low proportion of circulating shares and optimizing the empty state-owned assets.It is the first stock repurchase with commercial value in China.After the reform and opening up,the market economy has developed rapidly and the securities market has become more mature.The government has gradually relaxed the restrictions on repurchase and issued many laws to further regulate it.In 2005,the Securities Regulatory Commission promulgated the "Measures for the Management of Public Shares Repurchased by Listed Companies(Trial Implementation)",which gives a detailed explanation of stock repurchase,indicating that the restrictions on stock repurchase have been relaxed.In 2008,the Supplementary Provisions on Stock Repurchase by Centralized Bidding of Listed Companies were issued;in 2013,the Opinions on Further Strengthening the Protection of the Legal Rights and Interests of Small and Medium Investors in Capital Market were issued.These documents further regulated the behavior of stock repurchase and stimulated the enthusiasm of stock repurchase of listed companies.Since then,more and more stocks have been repurchased.Theoretical studies have emerged one after another,and more and more companies choose to buyback shares.Taking the financial effect of share repurchase of Listed Companies in China as the starting point,this paper chooses Haipurui,whose share repurchase accounts for the largest proportion of total shares in the company after the stock disaster in 2015,as the research object.Through case study,this paper explains the background and related concepts of stock repurchase,and makes a detailed analysis of the motivation and financial effect of stock repurchase of listed companies.Analysis.Firstly,after reading a large number of domestic and foreign literatures,this paper introduces the background,significance and relevant theories of stock repurchase by domestic and foreign scholars.Then,it explains the relevant concepts and representative theories,emphatically expounds the popular stock repurchase hypothesis and introduces the unique development process of stock repurchase under China's national conditions.This paper takes Hepburn Company as the case study object,analyses the real motivation of its stock repurchase from many aspects,and compares the financial indicators before and after the stock repurchase.It compares and analyses the changes of financial performance of Hepburn Company before and after the stock repurchase from four aspects:profitability,solvency,operation ability and development ability.On the other hand,we find that after the announcement of share repurchase,the financial indicators and comprehensive performance scores of Hepburn are declining,which indicates that it has a negative financial effect on enterprises.Finally,it summarizes the enlightenment obtained from the above and points out the problems of stock repurchase in China's securities market,and puts forward relevant suggestions for these problems.