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Share repurchases on the Tokyo Stock Exchange Trading Network

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  • Ota, Koji
  • Lau, David

Abstract

Tokyo Stock Exchange Trading Network (ToSTNeT) is a unique market in Japan in which firms can repurchase their shares during off-auction hours at a fixed price within a very short timeframe. In this study, we uncover a drawback in ToSTNeT which appears to have been exploited by managers of the repurchasing firms to favour certain sellers who have close economic ties with the firms. Further investigations reveal that it is impractical for retail investors to sell their shares on ToSTNeT. Our study proposes recommendations of regulatory and policy changes for the Tokyo Stock Exchange that may help tighten the loophole in ToSTNeT and safeguard the integrity of share repurchases in Japan.

Suggested Citation

  • Ota, Koji & Lau, David, 2021. "Share repurchases on the Tokyo Stock Exchange Trading Network," Journal of the Japanese and International Economies, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:jjieco:v:61:y:2021:i:c:s0889158321000277
    DOI: 10.1016/j.jjie.2021.101148
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    References listed on IDEAS

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    Cited by:

    1. Ota, Koji & Lau, David & Kawase, Hironori, 2022. "Signal strength adjustment behavior: Evidence from share repurchases," Journal of Banking & Finance, Elsevier, vol. 143(C).

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    More about this item

    Keywords

    Share repurchases; ToSTNeT; Japan;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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