A Research on the Determinants of the Announcement and Implementation of Share Repurchases for Chinese Listed Companies

Abstract

Abstract:

In this paper, we take the Chinese listed companies which have announced and implemented open market share repurchases as the sample and design a key determinant analysis model of share repurchases based on the corporate governance mechanism and corporate finance theories. Given the flexibility of open market share repurchase resulting in the time difference of the two stages (the announcement and implementation), and the two stages may be affected by different factors, we use Logistics and Tobit regression model respectively to study empirically the key determinants of the announcement and implementation stages of open market share repurchase from the perspectives of both corporate finance and corporate governance. We find that open market share repurchases are influenced by various factors in both the announcement and implementation stages. Thereinto, operating performance, the level of dividends payments, cash holdings and ownership concentration are the key determinants affecting the announcement of share repurchases, and the actual requisitions of shares for listed companies are influenced jointly by the stock price performance and cash flow level.

Key words: share repurchase, announcement and implementation, determinants, the signaling hypothesis, the financial flexibility hypothesis

He Ying, Li Jiao, Wang Zengmin. A Research on the Determinants of the Announcement and Implementation of Share Repurchases for Chinese Listed Companies[J]. , 2016, 28(4): 12-20.

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