Analysis On The Motivation And Effect Of Share Repurchase Of Listed Companies

Share repurchase originated in the United States and has been widely used in the international capital market.In China,due to policy restrictions and immature development of capital market mechanism,share repurchase develops slowly.The stock price reflects the expectation of the capital market on the future development of listed companies.The sharp fall of stock price may lead to a series of negative results,such as the evaporation of market value,the loss of investor confidence and even the risk of delisting of listed companies.In recent years,the domestic stock market has experienced a sharp decline.In order to encourage listed companies to actively rescue themselves,China Securities Regulatory Commission and other relevant departments jointly issued share repurchase policies in August 2015 and November 2018 respectively.With the support and encouragement of policies,listed companies that meet the repurchase conditions began to formulate repurchase plans and gradually implement them.This thesis selects Gree Electric as a representative case for share repurchase under the background of mixed ownership reform and the stock price decline caused by the epidemic,explores the real reasons for share repurchase of Gree Electric,analyzes the impact of this behavior on the company’s performance,and puts forward targeted suggestions from the three aspects of investors,listed companies and regulators.Through analysis and induction,the research conclusions are as follows: First,there are multiple motives for the share repurchase of Gree Electric,such as the implementation of equity incentives in cooperation with the mixed reform,the transmission of the signal of undervaluation of the share price,the promotion of the company’s share price,the response to the risk of covering the position faced by the major shareholders’ equity pledge,the suppression of the management’s over-investment behavior,and the replacement of cash dividends;Second,share repurchase is indeed effective in raising the share price of listed companies in the short term,but in the long term it depends on the operating performance of listed companies;Third,the implementation of share repurchase is perceived by the market in advance,which makes the stock price reflect the repurchase information in advance.Fourth,Gree Electric’s share repurchase has a positive impact on short-term solvency,capital structure,human resources capacity,R&D capacity and corporate strategy.In addition,targeted suggestions are also put forward from three aspects: investors,listed companies and regulators: investors should correctly identify the motives of share repurchases of listed companies,listed companies should fully and scientifically understand share repurchases,and regulators should strictly regulate the information disclosure of share repurchases,with a view to promoting the realization of the enterprise value of Gree Electric and the good development of share repurchases in China’s capital market.