Do buyback anomalies explain the stock return in Japan? A pre-registered report

Over the past two decades, the number of stock buybacks by U.S. corporations has increased tremendously. While buyback anomalies have been investigated in the U.S., identifying whether they are also observable out of the U.S. markets, such as in Japan, is challenging yet necessary. This pre-registered report seeks to reveal whether buyback anomalies persist for longer periods in Japan's stock market. We focus on whether the “costly arbitrage view” supporting buyback anomalies in the U.S. market applies to the long-term buyback announcement returns in Japan's stock market. This study also focuses on whether bank ties in bank-based (financial) systems mitigate long-term excessive stock returns due to buyback anomalies. We shed light on regulatory discussions regarding the restriction of corporate buybacks. Our study contributes to determining whether bank monitoring is effective in mitigating the degree of buyback anomalies in bank-based systems. • We investigate if buyback anomalies persist in Japan's stock market. • This report explores if “costly arbitrage view” applies to long-term buybacks in Japan. • This report also explores if bank ties in mitigating long-term stock returns due to buyback anomalies. • We contribute to regulatory discussions on the restriction of corporate buybacks.