Abstract:
As China's share repurchase regime continues to improve, the activity level of share repurchases in the A-share market has steadily increased. This paper reviews the overall characteristics of A-share repurchases, uses a sample of listed companies that announced repurchase plans, applies the event study method to analyze the market reactions triggered by repurchase announcements, and further employs the difference-in-differences method to evaluate the incentive effects of repurchase support policies on listed companies' repurchase behavior. The findings are as follows. First, the industry distribution of A-share repurchases has become increasingly diversified; from 2023 to 2025, emerging industries such as pharmaceuticals and biotechnology and electronics became the main forces of repurchases, and since 2018, private enterprises have accounted for an average of 60% of annual repurchase amounts. Second, repurchase announcements overall triggered significant positive market reactions, and these positive reactions were stronger for low-valuation companies, small-cap companies, and repurchases aimed at market value management, which is associated with such companies' greater scope for value recovery, higher degree of information asymmetry, and clearer value-maintenance signals. Third, the 2022 repurchase rules effectively enhanced listed companies' willingness to repurchase under conditions of market capitalization undervaluation or excessive share price declines. Under conditions of market capitalization undervaluation, the policy exerted a stronger incentive effect on small-cap companies, with no significant differences among companies of varying leverage levels, because small-cap companies typically face a higher degree of information asymmetry and thus have a stronger need to convey value signals through repurchases. Under conditions of excessive share price declines, the policy exerted a stronger incentive effect on large-cap or highly leveraged companies, because such companies have a stronger need to stabilize market expectations or improve financing conditions when share prices fall sharply. Based on the above findings, this paper proposes policy recommendations in terms of implementing differentiated incentives, enhancing investor returns, strengthening information disclosure, improving repurchase financing support and cultivating a mature repurchase culture.
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