Analysis Of Motivation And Effect Of Share Repurchase In Listed Companies ——Takeing Gree Electric As An Example

With the development of China’s economy and the development of the stock market,the number of listed companies in China is increasing,and share buybacks have gradually gone to the recognition of listed companies.However,the outbreak of the new crown epidemic in 2020 had a considerable impact on China’s economy,and the stock market also suffered a considerable impact,with the SSE index falling.Against this background,many listed companies have chosen share buybacks to re-buy company shares on the secondary market by using their own funds or unborrowed funds.Share buybacks can improve earnings per share and enhance corporate value by reducing the number of a listed company’s own shares on the stock market.Gree Electric announced a public share buyback with $6 billion of its own funds on April 13,2020,making it the "buyback king" of A-shares that year.Like most listed companies,Gree Electric mentioned in the share repurchase announcement that the share repurchase was motivated by the company’s future development prospects,the implementation of share incentives and employee stock ownership plans,and the enhancement of the company’s overall value.The second and third share repurchase announcements were made on October 13,2020 and May26,2021.In just over a year’s time,three share repurchase plans have been issued one after another for huge amounts of money,and the motivation behind them and their specific implementation effects are worth exploring.This paper focuses on the three share repurchase events of Gree Electric in 2020 and 2021.The second part introduces the relevant concepts and lays the theoretical foundation,then introduces the case background and the repurchase process of GREE’s share repurchase,followed by the analysis of the specific motives of GREE’s share repurchase from three perspectives,and then analyzes the market and financial effects of GREE’s share repurchase through the event study method and the comparison of various financial indicators.Then,we analyze the market effect and financial effect of the repurchase through the event study method and comparison of various financial indicators,and finally draw conclusions and insights from this paper.The conclusions of this paper are as follows: First,the amount of the three share repurchases of Gree Electric exceeds 15 billion yuan,and the analysis of the market effect of such a large amount of repurchases reveals that the increase of the share price of the company by this repurchase is not significant,and the increase of the share price in a few days does not completely solve the problem of the decline of the company’s share price.Therefore,listed companies should rationally view the market effect of share repurchase and not follow the trend to make relevant decisions.Secondly,the company should make a reasonable share repurchase plan according to its own situation and repurchase moderately,while it can also use multiple payment methods for share repurchase.Third,in the process of GREE’s share repurchase,there is an abnormal increase in the excess return before the announcement date and information leakage,etc.Relevant departments should strengthen the information disclosure system and supervision,whether before,during or after the event,and strictly stipulate the disclosure standards,while also drawing on the experience of other mature capital markets,taking their essence and combining with the specific conditions of China’s capital market to improve the share repurchase laws and regulations as well as The policy.