Effect of Share Repurchase on Stock Price of Chinese Listed Companies

Share repurchase is the behaviour of listed companies using their own or self-funded funds to purchase their own company’s shares in the stock exchange market. Share repurchase is already a very mature financial instrument in the European and American capital markets, and the Chinese securities market develops later, so the research on share repurchase in the Chinese capital market still needs to be in-depth. The purpose of this essay is to analyse the impact of share buybacks on stock prices of Chinese listed companies. Using the event study method to analyse the selected data samples from 2020 to 2022, 3 years, the relationship between share buybacks and stock prices is determined by calculating the average daily excess return and average daily cumulative excess return, after conducting a t-test. Finally, an industry test is conducted to select the most representative industry and the representative companies in the industry to apply the event study method again for research and validation. It is finally concluded that share buybacks have a short-term positive uplift effect on the company’s stock price.