Research On The Motivation And Effect Of Share Repurchase Of Listed Companies

Share repurchase originated from western capitalist countries.In the developed market environment,share repurchase has long been a common way for listed companies to conduct capital operation.However,due to the late formation of securities market in China and the special national conditions in the early stage,most of share repurchases by listed companies among few cases are for the purpose of non-tradable shares under small-scale.With the completion of the reform of non-tradable shares and the gradual improvement of securities market in China,the number of listed companies that choose share repurchase is increasing gradually,and the methods and motivations of share repurchase are also enriched.On October 26,2018,the modification of share repurchase provisions has been passed on the 6th meeting of the 13th National People's Congress standing committee,and the circumstances under which repurchase are allowed are supplemented.On the first trading day of company law amendment,more than 40 A-share listed companies responded positively,share repurchase by listed companies in 2019 alone amounted to the sum of the previous three years,the rising heat of share repurchase caused a wide attention of the market.However,domestic scholars do not have much research on share repurchase.Therefore,it is of certain practical significance to study the motives of listed companies in carrying out share repurchase and the impact of share repurchase.The share repurchase is studied in this paper base on the Heilan Home case.In the beginning of this paper,relevant literature about share repurchases at domestic and abroad has been studied,and the research status has been reviewed.Then it introduces the background of the share repurchase of Heilan home,starting from the status quo of the share repurchase of listed companies in China.The basic situation of Heilan Home,the process of share repurchase and especially the motivation have stated and analyzed followed,including the delivery of positive signals,alternative cash dividend policy,the use of free cash flow of the company,as well as the need of company development strategy.And the consequences of share repurchase have been analyzed from the perspectives of market effect,financial effect and other effect.The findings show that the positive effects have been promoted due to share repurchase,such as the increase of share price in a short term,the optimization of capital structure,as well as the improvement of the state of business.However,the problems come along side.The effect of increase of share price in a long term is not obvious,the information leakage may be existed,the risk of payment may be increased due to capital outflows,and the interests of minority shareholders may be damaged.And last but not least,specific suggestions have been put forward from the perspectives of companies and regulatory policies according to the above problems.And it is expected to provide certain reference basis for the subsequent share repurchase of Heilan Home and other listed companies.