Analysis On Google’s Share Repurchases Motivation And Economic Consequences

On October 26,2018,the sixth Session of the Standing Committee of the 13th National People’s Congress revised the relevant content of share repurchase of the Company Law to promote the further improvement of the capital market against the background of the continuous downturn of China’s stock market.Under the boom of share repur-chase,China still needs to learn from the mature capital operation means of share repurchase of foreign listed companies,and enrich the motivations of share repurchase concept according to the inherent characteristics of the company.This thesis uses these methods,including literature analysis,comparative analysis and event study method,with Google has announced a total of nine times share repurchase events since 2015-2021.Through the cumulative excess yields and statistical significant results bring share buybacks,short-term market effect,this thesis mainly try to analyse Google’s inherent qualities and motivation drive for shares repurchases.Furthermore,this thesis discusses the influence on stakeholders,including major shareholders,managers,medium and small shareholders and creditors.This thesis show that Google’s financial and governance characteristics have changed significantly before and after share repur-chase,and the company’s overall governance structure has been optimized.In terms of buyback motivation,this thesis analyzes Google’s financial and governance characteristics and summarizes the main motivation of Google share buyback,including increasing financial flexibility,reducing redundant free cash flow,sending positive signals to investors and improving the capital structure of the company.In terms of the economic consequences of buyback,Google’s share buyback has a short-term positive market effect and responds positively to the signals released by the outside world.Major shareholders and the management have received certain interest returns through share repurchase,while the interests of minority shareholders and creditors have not been significantly infringed by the company.Finally,the corresponding management suggestions are put forward to help listed companies in China to make rational use of share repurchase for capital operation.In terms of innovation,this thesis mainly contributes tot hese aspects of innovation:Construct a basic framework for analyzing the underlying causes of share repurchase from the perspectives of intrinsic characteristics and repurchase motivation,and explore the relationship between the intrinsic characteristics of the company and the motivation of the announcement of repurchase;This thesis breaks through the existing limits of share repurchase on finance and marketing effects,combine share buybacks and stakeholder concerns,innovatively discuss share buybacks’ influences on large shareholders,managers,small and medium-sized shareholders and creditors,broaden the scope of stakeholders.