Midea Group Share Repurchase Motivation And Effect Analysis

Share repurchase refers to the behavior of the company to repurchase the outstanding shares from the stock market in accordance with the corresponding procedures.It is also an internationally common way to stabilize and promote the stock price,improve the corporate governance structure and reward investors.It has become an important means of operation in the European and American capital markets.At the same time,the current domestic stock market is still in the stage of downward volatility,the stock price of listed companies is low,which provides a good opportunity for listed companies to carry out share repurchase.From 2015 to 2020,Midea Group has carried out four consecutive share buybacks,which is known as "the largest buyback company in the A-share market".Its share buybacks have A large scale and good implementation effect,which is highly representative and demonstrative in the Chinese securities market.Therefore,taking Midea Group as a case of continuous multi-period share repurchase,it has extremely important theoretical and practical significance to study the use of share repurchase to promote the operation development and value management of listed companies.In recent years,under the combined action of market environment and policy conditions,share buyback of domestic listed companies has developed rapidly.In this context,this thesis takes the buyback event of Midea Group from 2015 to 2020 as the research sample to explore the motivation and implementation effect of share buyback of listed companies.By analyzing and discussing whether share repurchase can motivate employees,boost market confidence and stabilize the company’s stock price;Whether it can affect the company’s debt solvency and bring financial risks;Can optimize the capital structure,reduce the cost of capital,improve the level of profitability and other issues;And on the basis of identifying the gains and losses of share repurchase,further clarify relevant issues and summarize successful experience,so as to provide reference for the better development of other listed companies.Firstly,this study reviews the case from the general situation of Midea Group and the buyback process,and discusses the motivation of share buyback.Then it analyzes the implementation effect of Midea Group’s share repurchase,and analyzes whether the implementation effect of Midea Group’s share repurchase reaches its buyback purpose.On the one hand,the market effect of repo is analyzed from multiple perspectives such as stock price trend and excess rate of return,on the other hand,the financial effect of repo is analyzed from profitability and solvency,and the non-financial effect of repo is analyzed from agency cost and ownership structure.Finally,on the basis of the conclusion,the policy suggestions are put forward from the level of listed companies,regulators and investors.Through the above analysis,the results in this thesis show that there are multiple drivers for share repurchase of listed companies,and repurchase has a positive effect of intervention to boost stock prices in the short term,but there is no significant long-term market effect.Repurchase increases profitability,optimizes capital structure,and reduces the weighted average cost of capital.Based on the above research conclusions,this thesis argues that at the level of listed companies,on the one hand,it is necessary to correctly understand and use share repurchase to stabilize the company’s stock price,and formulate repurchase decisions in combination with the company’s business development plan.On the other hand,the channels of repurchase funds should be broadened to avoid a single payment method,and information disclosure should be strengthened to protect the legitimate rights and interests of stakeholders;At the regulator level,on the basis that China’s share repurchase policy can be more perfect,more stringent application conditions are formulated for share repurchase "necessary to safeguard the value of the company and shareholders’ rights";At the investor level,it should provide reference for investors to identify the real motives of share repurchases of listed companies,and help minority shareholders to invest in stocks more independently and rationally.These measures not only provide case experience for the rational use of share repurchase by listed companies in China,but also provide reference for promoting the benign and standardized development of China’s securities market.