Capital market opening and share repurchases: Evidence from China's listed companies absorbed in the MSCI Emerging Markets Index

Li Li, Weifeng He and Shengqi Zheng

Finance Research Letters, 2024, vol. 66, issue C

Abstract: The inclusion of Chinas A-shares in the MSCI Emerging Markets Index (hereafter referred to as the MSCI index) represents a significant milestone in the opening of China's capital market. Using this inclusion as a quasi-natural experiment, this study examines the impact of capital market liberalisation on share repurchases. Our findings indicate that the opening of the capital market has a significantly positive effect on share repurchases, a conclusion that remains robust across a series of robustness tests. Mechanism analysis reveals that capital market liberalisation increases the risk of a stock price crash and encourages firms to repurchase shares as a signalling mechanism.

Keywords: Capital market opening; Share repurchase; MSCI; Stock price crash risk (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:66:y:2024:i:c:s1544612324007529

DOI: 10.1016/j.frl.2024.105722

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