Research On The Motivation And Effect Of Multiple Stock Repurchases Of Listed Companies

In recent years,share repurchases have appeared more and more frequently in the public eye,and the enthusiasm of listed companies for share repurchases has been growing.With the improvement of my country’s stock repurchases related systems and policies,the restrictions on corporate repurchases have become more and more relaxed,and listed companies have joined the share repurchase team one after another.In 2018,785 A-share companies carried out share repurchase,and the repurchase amount exceeded 50 billion yuan;in 2019,more than 1,000 companies carried out share repurchase,and the repurchase amount reached 117.4 billion yuan.In 2020,the repurchase boom subsided,and only 359 companies implemented share repurchases,costing a total of 57.994 billion yuan.Some of these companies frequently carry out share repurchase in a short period of time.This article will investigate the motive and impact of each phase of share buyback under the situation of the company’s frequent share repurchase.Within the last 16 months,Gold Phoenix has undertaken four consecutive share repurchases.This article employs the case analysis approach to investigate the motivation and impact of Gold Phoenix’s fourth phase of share repurchases,as well as the buyback of each phase under the situation of frequent repurchases.Are the repo market and financial consequences distinct? The background significance of share repurchases is discussed first,followed by the major research substance and research methodology of this study.Second,it defines the essential notion of share repurchases and the related theoretical foundation,as well as classifies and summarises the domestic and international research literature on the purpose and effect of share repurchases.Third,it describes the backdrop and particular method of Gold Phoenix’s fourth phase of share repurchases,followed by an analysis of the reasons for the repurchases.Fourth,it examines the market impact and financial impact of Gold Phoenix’s share repurchases,and using event research methodology to assess the impact of share repurchases on stock prices;and the impact of share repurchases on the company’s finances using standard financial indicators.Finally,conclusions are established based on the whole text analysis,and specific recommendations are made.The following outcomes are achieved from the case study:(1)Based on the key motivating hypothesis theories,it is discovered that the fourth phase of the Gold Phoenix share repurchases is expected through a review of the company’s operational circumstances,stock price,price-earnings ratio,and calculation of free cash flow.Buying to send a signal that the stock price is undervalued,and there may be managerial opportunism.One of the motivations for the second phase of share repurchase is to carry out an employee incentive plan.The fourth phase of share repurchases aims to increase the stock price while simultaneously boosting the efficiency of cash flow usage.(2)Using the event research method,it is discovered that the first,second,and fourth phases of Gold Phoenix’s share repurchases have massively increased the company’s stock price in the brief term,but the duration is shorter,and the beneficial impact on the stock price is declining,indicating that the effect of repurchases is becoming weaker and weaker in the case of frequent repurchases.However,the third round of share repurchases had no favourable influence on the company’s financial performance,and the market did not immediately respond favourably to Gold Phoenix’s share repurchases.(3)Analysis of financial data found that the first,second and fourth phase of share repurchases had a certain degree of positive impact on the company’s profitability and long-term solvency;the third wave of share repurchases enhanced the company’s profitability marginally,but it also weakened the company’s long-term solvency.The total impact,however,is minor,and the four-phase share repurchases have a negative influence on the company’s short-term solvency.The operating capacity has not been significantly improved after the four-phase share repurchases.The following conclusions are reached from the aforesaid analytical results:(1)The primary goal of the listed company’s share repurchases is to send a signal that the company’s stock price is undervalued.(2)Share repurchases have a short-term impact on the stock price of the firm.(3)It is not the case of each issue of shares repurchases can improve stock price(4)The degree and duration of the positive effect of frequent share repurchases on stock price decreases(5)Share repurchases has little effect on the improvement of the company’s financial performance and impair short-term solvency..