Share repurchases on the Tokyo Stock Exchange Trading Network

Koji Ota; David Lau

doi:10.1016/j.jjie.2021.101148

Share repurchases on the Tokyo Stock Exchange Trading Network

Koji Ota^*, David Lau

^*Corresponding author for this work

Graduate School of Business and Finance

Research output: Contribution to journal › Article › peer-review

1 Citation (Scopus)

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.

Original language	English
Article number	101148
Journal	Journal of The Japanese and International Economies
Volume	61
DOIs	https://doi.org/10.1016/j.jjie.2021.101148
Publication status	Published - 2021 Sept

Keywords

Japan
Share repurchases
ToSTNeT

ASJC Scopus subject areas

Finance
Economics and Econometrics
Political Science and International Relations

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10.1016/j.jjie.2021.101148

Cite this

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title = "Share repurchases on the Tokyo Stock Exchange Trading Network",

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.",

keywords = "Japan, Share repurchases, ToSTNeT",

author = "Koji Ota and David Lau",

note = "Funding Information: The authors have received research grants from Japan Society for the Promotion of Science (JSPS KAKENHI Grant Numbers JP19K01768, JP19K13866). Koji Ota and David Lau declare that they have no conflict of interest. We are grateful for comments and feedback of David Emanuel, Dimitris Margaritis, Moritz Wagner, Shota Otomasa, Takuya Iwasaki, and all seminar participants. Publisher Copyright: {\textcopyright} 2021 The Authors",

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doi = "10.1016/j.jjie.2021.101148",

language = "English",

volume = "61",

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AU - Lau, David

N1 - Funding Information: The authors have received research grants from Japan Society for the Promotion of Science (JSPS KAKENHI Grant Numbers JP19K01768, JP19K13866). Koji Ota and David Lau declare that they have no conflict of interest. We are grateful for comments and feedback of David Emanuel, Dimitris Margaritis, Moritz Wagner, Shota Otomasa, Takuya Iwasaki, and all seminar participants. Publisher Copyright: © 2021 The Authors

PY - 2021/9

Y1 - 2021/9

N2 - 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.

AB - 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.

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Share repurchases on the Tokyo Stock Exchange Trading Network

Abstract

Keywords

ASJC Scopus subject areas

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