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

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  • Li, Li
  • He, Weifeng
  • Zheng, Shengqi

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.

Suggested Citation

  • Li, Li & He, Weifeng & Zheng, Shengqi, 2024. "Capital market opening and share repurchases: Evidence from China's listed companies absorbed in the MSCI Emerging Markets Index," Finance Research Letters, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:finlet:v:66:y:2024:i:c:s1544612324007529
    DOI: 10.1016/j.frl.2024.105722
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    References listed on IDEAS

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