Research On Kanion Pharmaceutical's Share Buyback Motivation And Economic Effect

Share Repurchase is originated in the Western capitalist countries,and refers to the behavior of listed companies to use various methods to raise funds for the recovery of company stocks circulating outside the company for various purposes.Western developed capitalist countries have developed a deeper understanding of share repurchases after decades of development,and have a strong ability to use them.They have received widespread attention in Western capital markets.However,in China,due to the late start of the capital market itself,the history of stock repurchase is more short-lived,and China's capital market system is relatively special,and it cannot directly use the experience of Western countries to develop share repurchase.The early stock repurchase existed for the reform of state-owned enterprises' share split,so China has strict control over it,and it is difficult for ordinary listed companies to use share repurchase.With the deepening of reform and opening up,China's securities market is gradually developing.The mechanism has also tended to improve,and the restrictions on share repurchases have been gradually relaxed,making share repurchase more and more developed in China.In 2018,the overall trend of the A-share market was sluggish.Most of the listed companies' share prices showed a rapid downward trend,and some companies faced a crisis of liquidation.China must take certain actions to maintain good activities in the securities market.With the revision of the company law in 2018,the state's policy support for share repurchases has opened the door for A share repurchases.Share repurchase,as a tool to convey positive information to the stock market,has received a lot of practice in 2018.The number of A-share companies that implemented share repurchase in 2018 and the total amount of repurchase reached a historical record,with nearly 800 A shares listed.The company implemented share repurchase;the total repurchase amounted to 53.425 billion yuan,which is 2.3 times the sum of the total amount of repurchase in three years from 2015 to 2017.In this paper,chose Jiangsu Kanion Pharmaceutical as a case company.Based on the case study method,index comparison study,event research method,and financial comparative analysis method are used to explore the causes and effects of Jiangsu Kanion Pharmaceutical's stock repurchase.After sorting out relevant literature and theories,a separate and in-depth analysis of the case of Jiangsu Kanion Pharmaceutical's sharerepurchase is focused on the motivation of Jiangsu Kanion Pharmaceutical's share repurchase and the financial effects of this share repurchase on the company Researched and analyzed market efficiency,and found out the motive and effect of corporate repurchase from related financial indicators and data.After conducting research and analysis on the share repurchase of Kanion Pharmaceutical,it was found that the main motivation for the share repurchase of Kanion Pharmaceutical was that the price-earnings ratio of Kanion Pharmaceutical was relatively low compared with the enterprises in the same industry or the average level in the same industry.The value of the company is seriously underestimated,and a signal of underestimation of the company needs to be transmitted to the outside world through share repurchases.At the same time,based on the theory of free cash flow hypothesis,financial leverage hypothesis,wealth transfer hypothesis and stock option hypothesis,the possible hidden motives of Kanion Pharmaceuticals were explored,and it was concluded that Kanion Pharmaceuticals did not have these four motives for this share repurchase.Conclusion.In addition,through analysis of market effects and financial effects,it was found that Kanion Pharmaceutical's stock repurchase brought stock price rise and positive excess cumulative return rate,and corporate value was improved.The analysis of financial data before and after the repurchase of Kanion Pharmaceutical found that the share repurchase also brought a certain positive financial effect in terms of solvency,equity structure and long-term cash flow.Based on this,this article believes that Kanion Pharmaceutical's share repurchase is a relatively successful repurchase and has reference significance for other listed companies.Based on the analysis and research of Kanion Pharmaceutical's share repurchases,this article has got two revelations: one is that listed companies should make reasonable repurchases,and the other is that investors should make reasonable investments.