The listed company repurchases shares with its own idle funds and then cancels the repurchased shares, which can improve the rights and interests of existing shareholders and improve the rights and interests of existing shareholders a lot. For example, the total share capital of listed companies 100 shares, 50 shares in circulation, 50 shares in the hands of major shareholders; On a certain day, the listed company repurchased 10 shares in cash, and then cancelled 10 shares, and the total share capital of the listed company became 90 shares. Will the rights and interests of these 90 shares be improved? This is also one of the reasons why listed companies want to buy back shares.
The second reason is to boost investors' confidence in holding shares and stimulate stock prices to rise.
When the stock price of listed companies is in a long-term downturn or long-term decline, if the stock continues to fall, it will have a greater impact on listed companies, such as the shrinking assets of major shareholders, and the stock pledge risk will also appear when the stock is pledged for listing. In order to boost investor confidence and promote the recovery of stock price trend, listed companies will also choose to buy back their own shares at this time, especially large-scale repurchase, which will definitely stimulate the rise of stock price. Or let more investors pay attention to the company's share repurchase. After many investors choose to buy stocks, they can also alleviate the downturn or long-term decline of stock prices.
Reason 3: Share repurchases are used for equity incentives.
In order to arouse the enthusiasm of employees, listed companies make employees feel that the company is their own company and work not only for the company, but for themselves. After employees hold shares in the company, if the company develops well, the share price of the shares they hold will rise sharply. After the company's profit is good, the earnings per share will also increase, and the annual dividend will also increase greatly. But at present, the total number of shares in the company is so much. A large part of the shares are circulated in the secondary market, scattered in the hands of investors, and a large part is in the hands of major shareholders, so it is not realistic for major shareholders to take these shares. Therefore, listed companies will choose to buy shares in the secondary market and then use these shares to motivate employees.
Reason 4: To prevent the company from being maliciously acquired, the actual control right of the company has changed.
When the original company went public, many founders or actual controllers greatly diluted their shares in order to go public, so that a large part of the shares circulated in the secondary market. Especially after listing, many companies will complete a series of financing behaviors such as fixed increase and non-public offering, which will continue to dilute their shares and help the company tide over the difficulties after financing. Later, the company developed better and better. Due to the large circulation of shares, if other institutions take a fancy to the development of the company, they will buy in large quantities in the market. When the number of shares reaches a certain scale or is much larger than the actual controller, the actual control right of the company is lost at this time. Once the actual control right changes, the later development and reorganization of the company are all decided by others. The previous Vanke incident was basically like this.