Research On The Causes And Effects Of M Company’s Stock Repurchase

The meaning of stock repurchase is the behavior of a listed company who use its own funds or debt financing to buy back a certain amount of shares issued by the company from the stock market.As an crucial tool in the capital market,stock repurchase is also an effective financial tool for enterprises.Stock repurchase appeared early and widely used in European and American capitalist countries.In contrast,it started late in China.Initially,it was mainly to repurchase non-tradable shares in order to ease the problem of excessive centralization of state-owned shares.Repurchase restrictions are more restrictive and have obvious Chinese characteristics.In the later period,China’s stock repurchases have gradually become market-oriented with the progress of the capital market and the market environment.more and more listed companies in China have opted for stock repurchases now,especially when the secondary market fluctuates dratically.Stock repurchases have become a tool for corporate "protection" and set off a wave of stock repurchases.However,the marketization of China’s stock repurchase is still in the stage of continuous exploration.Therefore,we conduct in-depth research on the stock repurchase implemented by listed companies in China at this stage.Based on the drivers and effects,we evaluate and judge the repurchase decision on the company.It is of great significance to explore the application of the financial decision of stock repurchase in China’s listed companies.This article is divided into seven parts: Chapter 1 briefly explains the research background and significance of this article,the research content and methods,and summarizes the domestic and foreign literature on the motivation and economic consequences of stock repurchases.Chapter 2 elaborates the basic connotation of stock repurchases,and systematically introduces wealth effect theory,signal transmission theory,and principal-agent theory,which lays a theoretical foundation for the specific analysis later.Chapter 3 is the current situation of China’s stock repurchase,summarizes the system and development process of China’s stock repurchase,and makes statistics on the number,method,source of funds,and motivation of repurchase under the centralized auction method.Chapter 4 takes M company as an example,introduces the overview of M company,summarizes the course of its two stock repurchases,and analyzes the background of the company’s stock repurchase.Chapter 5 verifies and analyzes the motivation of M company’s repurchase announcement,and then analyzes the market response of the case company’s two repurchases using the event research method,and uses the financial index analysis method to discuss its financial effect.Chapter 6 is based on the previous analysis of the impact of M company’s stock repurchase on the value of the company,summarizes the problems of M company’s stock repurchase,analyzes the problem based on the repurchase decision elements,and then proposes methods to optimize the company’s repurchase decision.Chapter 7 is the conclusion and prospect of this article.The results of the study show that the main motivation for the company’s stock repurchase announcement is to maintain a reasonable valuation of the stock price and increase earnings per share.Stock repurchase can immediately raise the company’s stock price and bring about a positive market response,but the promotion of the stock price is limited,the time is short,and there is a certain gap with the company’s original repurchase expectations.Stock repurchases have a boosting effect on the company’s profitability in the short term and have a positive impact on the company’s operating performance.At the same time,stock repurchases may increase the company’s financial risk.This article suggests that when a company makes a repurchase decision,the choice of repurchase timing should be based on the repurchase motivation and the company’s development,the choice of repurchase funds should be diversified,the choice of payment method should pay attention to prevent financial risks,and the repurchase pricing should be fair and reasonable,In order to optimize the company’s repurchase decisions and help companies better implement stock repurchase.