The Research On Market Reaction Of Share Repurchase Under Different Motivations Of Listed Companies In China

Share repurchase is the re-acquisition by a listed company of its own stock.It refers to the exchange,using cash,debt or other methods,for a reduction in the number of shares outstanding.Share repurchase was first used in the United States in the 1950 s,and then gradually became a means of capital operation for listed companies.Compare with developed countries,China's financial market is not mature enough.After non-tradable shares reform,stock repurchase has gradually been adopted by listed companies of China.Relevant policy which was issued by China Securities Regulatory Commission on November 9,2018 clearly supported listed companies to repurchase shares.There is a great development space for stock repurchase in the future in China.Therefore,it is of great significance to study the motivation and market reaction of stock repurchase of listed companies for the development of China's capital market.This paper first summarizes the domestic and foreign research results on the motivation and market reaction of stock repurchase of listed companies,and determines the content and ideas of this paper based on the research of domestic and foreign scholars.Secondly,it expounds the theoretical basis of stock buyback,then analyzes the current situation of stock buyback in China's listed companies,classifies and summarizes the motivation of stock repurchase in China,summarizes the development trend of each motivation,puts forward the existing problems,and uses event research method to conduct empirical research on the market reaction broughtby stock repurchase under each motivation.The main idea is to get the relationship between individual stock return rate and market return rate through the single-element regression model,so as to estimate the normal return rate that a stock should obtain when there is no stock buyback in the event window period.Compared with the actual return rate in the event window period,we can calculate the excess return rate that the stock shows due to the announcement of stock buyback to explain the market's stock repurchase response to the announcement.The results show that: first,the main motivation of stock repurchase in China is equity incentive cancellation,equity incentive implementation,market value management and profit compensation;second,the market reaction of stock repurchase brought by listed companies is positive,and there is a significant positive reaction before the release of the repurchase plan;third,equity incentive cancellation,equity incentive implementation and profit compensation The stock repurchase under compensation three kinds of motivation can bring significant positive market reaction,while the stock repurchase under market value management has significant negative market reaction after the announcement of buyback news,which shows that the stock buyback based on market value management motivation has no obvious promotion effect on the stock price;fourthly,comparing the two motivation of equity incentive cancellation and implementation of equity incentive,based on the implementation of equity incentive The positive market reaction appears earlier and takes longer than the stock repurchase driven by equity incentive cancellation.In addition,it is worth noting that on the third day after the announcement of the repurchase plan,the stock return rate of the repurchase company decreased significantly,which is related to the decrease of information transmission effect caused by the increase of stock repurchase events in China and the psychological expectation of investors in the stock market for stock repurchase.Finally,this paper gives corresponding suggestions from the four perspectives of investors,companies,legislative departments and regulatory departments,hoping to regulate the development of stock buyback from all aspects,which plays an important role in the healthy and orderly development of China'scapital market.