Research On The Motivation And Effect Of Tang Renshen’s Stock Repurchase

The spirit of the No.1 Central Document in 2022 calls for the establishment of a long-term mechanism to maintain pig production,improve the comprehensive capacity of pig production,ensure the healthy development of the pig breeding industry,which involves the "vegetable basket" of millions of households,and ensure the stable market of pork,which is the most important concern of the people.In2018,the national Outbreak of African Swine fever(ASF)gradually exposed the shortcomings of the pig breeding industry.The number of pigs produced declined,the price of pigs rose rapidly,and people had a problem eating meat.The whole industry was in a downturn.Downward in addition,the domestic capital market,many listed companies the market value of shrinking,many choose to implement the stock repurchase of listed companies,the market share buybacks number increase,so the securities and futures commission,the Ministry of Finance and state-owned assets supervision and administration commission joint mandate,the details of the implementation of stock repurchase on the company detailed regulations,increase the company’s risk management ability.This thesis studies the first share repurchase behavior of Tang Renshen Group in 2018,and systematically studies the motivation,process,financial effect and market effect of the company’s share repurchase.First of all,by comparing the market value index and return on equity of the company with the industry average,we find that the stock price of the company is undervalued by the market,which is consistent with the purpose of buyback in the company plan.At the same time,it is also found that there are other motivations for Tang Renshen’s share repurchase,including adjusting and optimizing the company’s capital structure,implementing equity incentive,making full use of free cash flow and increasing the company’s earnings per share.Secondly,financial index method and event study method are used to analyze the financial effect and market effect of stock repurchase.On the one hand,it is found that after the implementation of stock repurchase,The profitability and growth ability of Tang Renshen have been improved,but the operating ability and debt paying ability have been weakened.On the other hand,the company’s stock repurchase can improve the company’s stock price and total market value in the short term,but the long-term effect is not obvious.Finally,this thesis summarizes the enlightenment of Tang Renshen’s stock buyback research and puts forward the following suggestions: 一 、 From the level of listed companies: Formulate reasonable buyback plans to avoid financial risks;The use of share buyback funds should be limited;Correctly understand the impact of stock repurchase on the company;Pay attention to the interests of creditors and minority shareholders.二 、 From the regulatory level:Strengthen the supervision of the whole process of stock repurchase of listed companies;Strengthen information disclosure.三 、 From the perspective of investors: Understand the real purpose of stock repurchase of listed companies to avoid damage to their own interests.