Abstract:
We study share repurchases through Tokyo Stock Exchange Trading Network (ToSTNeT), a system in Japan that allows trading to be executed during off-auction hours as an alternative to open market repurchases (OMR). Most firms disclose the use of ToSTNeT when announcing the share repurchase programme. However, some firms do not, which we refer to as “hidden ToSTNeT”. Overall, we find evidence suggesting firms that use hidden ToSTNeT experience temporary share price increases, which reverse when firms subsequently disclose the use of ToSTNeT. In most of these cases, shares are repurchased from large single investors who are also executives of the firms.