Analysis Of The Motivation And Effect Of Kunming Pharmaceutical Group's Share Repurchas

As a capital instrument for listed companies to repurchase their own outstanding shares,the theory of share repurchase first emerged in developed countries in the West,and after decades of exploration,it has produced a more complete theoretical system and has a wealth of practical experience.Share repurchase started late in China,and the theory of share repurchase applicable to our situation is currently in the growth stage of continuous improvement.Under this background,the analysis and study of share buybacks of listed companies has certain significance from both theoretical and practical aspects.The share repurchase of KPC Pharmaceuticals,Inc.in 2020 was a perfectly completed repurchase in accordance with the repurchase plan,in line with the expected motives and with certain results in terms of market,financial and strategic effects,based on the fact that it was not fully completed as expected in both previous years;In addition this is a non-directional share repurchase typical of the largest transaction turnover and the highest percentage of repurchase since 2019 and up to the end of 2022.This paper uses the literature research method,the case study method and the event study method in the context of the share repurchase event in 2020 of KPC,based on the theory of the motivation and effect of share buyback.Firstly,to verify the authenticity of the motives announced by KPC to boost the share price and conduct equity incentives,and to analyze the potential motivation of this repurchase to adjust the capital structure,increase the utilization of funds and build up the strength for subsequent merger and acquisition.Secondly,we will sort out the market effect,financial effect and strategic effect of share repurchase,and comprehensively study the impact of share repurchase at the effect level,taking into account the actual situation of KPC.The case study revealed that:(1)There are real underlying motives for this share repurchase in addition to the announced motives.(2)The share repurchase has a significant short-term market announcement effect and has a positive effect on enhancing the share price.(3)The share repurchase did not cause any significant fluctuations in the financial performance of KPC Pharmaceuticals,Inc and contributed to the optimization of capital structure to a certain extent.(4)The share repurchase alleviates principal-agent problem,improves corporate governance effects,promotes the strategic objectives,which is in line with the long-term strategic planning of KPC Pharmaceuticals,Inc to build core competitiveness.But limited effect on strategic capability enhancement.This paper has certain significance for enriching the theory of repurchase,improving the repurchase system and raising the awareness of relevant domestic investors,in order to provide experience reference for share repurchase of relevant listed companies.