Research On The Motivation And Economic Consequence Of Stock Repurchase Of Goertek

Stock repurchase,as a capital operation means of enterprises,originated from western capitalist countries and has a history of hundreds of years.Stock repurchase refers to listed companies using their own funds or financing funds to repurchase shares issued in the secondary market by centralized bidding or offer to buy back,so as to improve the share price by reducing the number of outstanding shares.With the continuous development of the capital market,the method of stock repurchase has been gradually developed and improved,which has been adopted by more and more enterprises.In the downturn period of China's stock market in 2018,listed companies have adopted the method of stock repurchase to deliver positive information and enhance investor confidence.With the blowout growth of stock repurchase in China,on November 9,2018,China Securities Regulatory Commission,the state owned assets supervision and Administration Commission and the Ministry of Finance jointly issued the opinions on supporting listed companies to repurchase shares to support and regulate the stock repurchase behavior of enterprises.As a capital operation tool,stock repurchase is favored by more and more listed companies.It is of great theoretical and practical significance to study the causes and economic consequences of stock repurchase.This paper takes the 2018 stock repurchase event of Goertek as the research object,takes the repurchase motivation and economic consequences as the starting point,and uses case analysis,event research and other methods to make a detailed study and analysis of the capital operation mode of stock repurchase.On the basis of reading a large number of literature,this paper first expounds the relevant concepts and theories of stock repurchase,and then analyzes the motivation and Realization of corporate repurchase with the specific case of Goertek's share repurchase.It is concluded that the purpose of Goertek's share repurchase is to improve the undervalued share price,adjust the financial leverage of the enterprise and implement the employee stock ownership plan.After the repurchase These motives have also been realized.Then,this paper analyzes and compares the economic consequences before and after the repurchase of Goertek,from the two aspects of financial effect and shareholder wealth effect.Through the analysis of excess return rate,it can beconcluded that the repurchase of Goertek has a certain positive role in stabilizing the stock price,but the long-term effect is limited,and it can also improve the earnings per share in the short term.However,the free cash flow of goer's shares is not sufficient and the pressure of short-term debt repayment is great.The stock repurchase increases the financial risk.Through calculation and analysis,the economic added value of Goertek is obtained,and the effect of stock repurchase on creating wealth for shareholders is limited.Finally,this paper draws enlightenment from the government and the enterprise two aspects.In the government,they should prevent information leakage,perfect the repurchase financing requirements;In terms of companies,they should choose to carry out share repurchase when the share price of the company is undervalued and has good investment value and the company has sufficient free cash flow,make a reasonable stock repurchase plan according to the company's own situation and repurchase motivation,and pay attention to prevent financial risks during repurchase.Through the case study of stock repurchase of Goertek,it is hoped that this paper can provide some reference and experience for the effective implementation of stock repurchase of other listed enterprises.