Cash Dividends vs. Share Repurchases and Cancellations: A Comparative Analysis of Shareholder Return Mechanisms in Chinese and U.S. Markets

This analysis is based on an in-depth article published by Xueqiu Finance on November 13, 2025, exploring the essential differences between cash dividends and share repurchases/cancellations as shareholder return methods and their current market applications [1]. Cash dividends give shareholders direct choice rights, while share repurchases and cancellations are company-led capital allocation strategies that directly boost earnings per share by reducing share capital.

In 2025, U.S. corporate stock repurchase volumes hit a historical high, reaching $1 trillion by August 20, setting a record for the shortest time to reach this scale [2]. Major tech and financial companies led the repurchase boom:

• Apple Inc.
  : Announced a $100 billion repurchase plan, current market capitalization is $4.03 trillion [0][2][3]
• Alphabet
  : $70 billion repurchase plan [3]
• NVIDIA
  : Added a $60 billion repurchase authorization [3]
• JPMorgan Chase
  : $50 billion repurchase plan [3]
• Bank of America
  : $40 billion repurchase plan [3]

U.S. stock repurchases have become a core market driver, backed by mature mechanisms of institutional dominance and executive incentives. Apple’s current stock price is $272.41, with analysts’ consensus target price at $300.00, indicating a remaining upside of 10.1% [0].

In contrast, although A-share repurchases are accelerating, their scale remains limited:

• Repurchase Scale
  : The whole market announced 1321 repurchase proposals, with expected repurchase amount exceeding RMB 164.2 billion [1]
• Cash Dividends
  : 818 listed companies announced interim dividend plans, an increase of 141 from the same period last year [1]
• Total Dividend Amount
  : Cash dividend total reached RMB 649.7 billion, an increase from the same period last year [1]

A-share repurchase motivations are mostly tilted toward equity incentives, with low cancellation ratios, showing significant differences from U.S. stocks. In an environment of concentrated ownership structure, if the company’s investment return rate is insufficient, mandatory repurchases can easily trigger capital misallocation and agency problems, posing potential investment risks [1].

In 2025, the regulatory policy environment underwent major changes. The China Securities Regulatory Commission (CSRC) issued the “Several Opinions on Strengthening the Protection of Small and Medium Investors in the Capital Market”, strongly advocating “cancellation-type repurchases” [4]. Since the “Regulatory Guidelines for Listed Companies No.10 - Market Value Management” was promulgated one year ago:

• System Coverage
  : 1001 A-share companies disclosed market value management systems, about 5 times that of the beginning of this year [4]
• Stock Price Performance
  : The average stock price increase of companies disclosing market value management systems was 20.63%, 5.9 percentage points higher than the CSI 300 Index [4]
• Repurchase Implementation
  : 326 listed companies repurchased a total of RMB 48.936 billion, a year-on-year increase of 13.85% [4]

(as of November 14, 2025) [0]:

• Shanghai Composite Index: 3990.49 points, monthly increase of 1.9%, weekly decrease of 0.7%
• Shenzhen Component Index: 13216.03 points, monthly increase of 0.99%, weekly decrease of 1.58%
• ChiNext Index: 3111.51 points, monthly increase of 2.44%, weekly decrease of 2.12%
• CSI 300: 4628.14 points, monthly increase of 0.21%, weekly decrease of 1.43%

[0]:

• Apple (AAPL)
  : P/E ratio of 36.35x, ROE of only 1.64%, net profit margin of 26.92%
• Kweichow Moutai (600519.SS)
  : P/E ratio of 20.31x, ROE of 37.17%, net profit margin of 51.50%

The key to the success of U.S. stock repurchases lies in mature institutional dominance and executive incentive mechanisms, while the A-share market is still in the stage of institutional improvement. Market value management has changed from an “implicit topic” to an “explicit norm”, but the implementation effect and regulatory intensity still need to be observed [4].

1. Agency Problem Risk
   : Under concentrated ownership structure, if the company’s investment return rate is insufficient, mandatory repurchases can easily trigger capital misallocation and agency problems [1]

2. Interest Transfer Risk
   : Some A-share companies’ repurchase motivations are tilted toward equity incentives, with low cancellation ratios, which may have suspicion of interest transfer [1]

3. Policy Implementation Risk
   : Although regulatory policies are positive, the actual implementation effect still needs time to verify

4. Market Volatility Risk
   : The current weekly performance of the A-share market is generally declining, indicating cautious market sentiment [0]

1. Policy Dividend Period
   : The implementation of market value management guidelines brings institutional opportunities, and related companies’ stock prices have performed prominently [4]

2. Improvement of Repurchase Quality
   : With regulators advocating cancellation-type repurchases, the quality of A-share repurchases is expected to improve

3. Increase in Dividend Frequency
   : The number of companies with interim dividends is growing, providing investors with more cash return options

4. Learning from International Experience
   : Mature U.S. stock repurchase mechanisms can be referenced to improve relevant A-share systems

Based on comprehensive analysis, cash dividends and share repurchases/cancellations each have their pros and cons, and the choice should be based on the company’s specific situation and market environment. The U.S. stock repurchase mechanism is mature and has become a core market driver; A-share repurchases are developing but still face institutional improvement challenges.

When making decisions, investors should pay attention to factors such as the company’s cash flow status, rationality of ownership structure, perfection of governance structure, and authenticity of repurchase motivation. Priority should be given to enterprises with strong cash flow, true implementation of cancellation-type repurchases, and relatively dispersed ownership structure, balancing dividend and repurchase return methods.

Changes in regulatory policies bring new opportunities to the market, but investors still need to remain cautious, pay attention to policy implementation effects and actual market reactions, and avoid blindly following repurchase concepts.