Analysis of the motivation and effect of Mindray Medical's share repurchase

Yuqin Xia; Yuting Wu; Lu Yang

doi:10.71113/JCSIS.v2i4.218

Authors

Yuqin Xia Faculty of Economics and Law, Jingdezhen Vocational University of Art, China
Yuting Wu Faculty of Economics and Law, Jingdezhen Vocational University of Art, China
Lu Yang Faculty of Economics and Law, Jingdezhen Vocational University of Art, China

DOI:

https://doi.org/10.71113/JCSIS.v2i4.218

Keywords:

share repurchase; repurchase motivations; marketing effect; financial effec

Abstract

Since the gradual relaxation of China's stock repurchase policy in 2018, many listed companies have implemented repurchases, among which the phenomenon of "flickering repurchases" has increased, causing the market to worry about insider trading and profit transmission. This paper takes Mindray as the research object to explore the motivation and effect of its share repurchase.The study found that the main motivations for Mindray to repurchase shares include equity incentives, cancellation of shares, reduction of registered capital, and reduction of agency costs. The buyback has a certain boost to the company's stock price in the short term, but its long-term support effect is limited. At the financial level, the buyback optimizes the company's financial indicators to varying degrees.This paper uses the event research method to analyze the short-term impact of the buyback announcement on the stock price, and evaluates the improvement of the buyback on the company's financial position based on the financial data. The results show that Mindray's buyback has diversified goals, but investors need to be alert to potential risks, and should comprehensively examine the buyback strength, process, and special action events to accurately judge the company's true motives.

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