An Analysis Of The Motivation And Financial Effect Of Stock Repurchase Of Listed Companies

In the 1970 s,stock repurchase began to prevail in developed western capitalist countries.At that time,because the securities market in western countries was relatively stable,stock repurchase was usually regarded as a kind of financing behavior of listed companies,and also a way of capital operation of listed companies.Compared with western countries,due to the particularity of China's economic environment and national conditions,the development of China's securities market is relatively slow.At the same time,there are many regulations and restrictions on stock repurchase,so the start of stock repurchase in China is relatively backward.However,with the deepening of reform and opening up,the introduction of relevant laws and policies,and the increasingly mature background of the securities market,more and more listed companies begin to understand the stock repurchase,and gradually realize that the stock repurchase has a certain role in promoting the stability of the capital market,and to some extent,it can improve the intrinsic value of the company.Therefore,stock repurchase has been widely concerned and applied.After China Securities Regulatory Commission formally promulgated the relevant management measures of stock repurchase in 2005,many listed companies in China began to enter into the field of stock repurchase.In 2015,there was a stock disaster in China's securities market,which caused the stock of listed companies to plummet.The listed companies adopted the way of stock repurchase to maintain the stock price and stabilize the investor's confidence,so as to tide over the stock market crisis.Therefore,the research on the motivation and financial effect of stock repurchase can improve the theory of stock repurchase on the one hand,and provide reference for the actual operators of stock repurchase of listed companies on the other hand.This paper focuses on the motivation and financial effect of stock repurchase of Xinhu Zhongbao by case study.Taking Xinhu Zhongbao listed company as the research sample,the main reason is that this stock repurchase is the largest in 2016 stock market,involving the most amount of stock repurchase,and has achieved the purpose of initial stock repurchase,which has certain pertinence and typicality.This paper read and collated the domestic and foreign literature related to stock repurchase,in order to understand the domestic and foreign scholars' research on stock repurchase motivation and financial effect.Through the analysis,the main causes of stock repurchase are as follows: improve the stock price and intrinsic value of listed companies,make full use of the company's free cash flow to reduce agency costs,adjust financial leverage to optimize the capital structure,replace the company's cash dividend to reduce the pressure of the company's cash dividend,and as a tool to implement equity incentive.At the same time,it is found that on the one hand,stock repurchase will bring positive effect to the financial effect of enterprises,but on the other hand,it also has some negative effects.Secondly,the relevant theories of stock repurchase are summarized.On the basis of signal transmission theory,financial effect theory and principal-agent theory,the behavior of stock repurchase activities of Xinhu Zhongbao is studied and analyzed.It is concluded that the main motivation of the implementation of stock repurchase of Xinhu Zhongbao is to enhance the company's share price,replace cash dividend policy and improve the capital of listed companies Utilization efficiency.In addition,this paper focuses on the analysis of the financial effects of stock repurchase,from the perspective of stock price,cash flow,financial leverage effect,equity structure and financial performance,it is concluded that the stock repurchase to a certain extent improves the company's stock price,and achieves the purpose of improving and optimizing the company's financial situation and operating performance.Finally,according to the conclusion,the paper puts forward corresponding solutions to the problems of stock buyback from the perspectives of government and enterprise.The government needs to improve the relevant laws and regulations of stock repurchase and strengthen the supervision;the enterprise needs to make a reasonable plan of stock repurchase,grasp the exact timing of repurchase,and pay attention to the rational balance of the advantages and disadvantages of stock repurchase to ensure the profit Interests of stakeholders.