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Define treasury stock and explain why a corporation would purchase its own stock?
Wiki User
∙ 14y ago
Treasury Stock
Common stock that has been repurchased by the company and held in the company's treasury. These shares don't pay dividends, have no voting rights, and are not part of the total number of shares outstanding, although they are still counted as part of shares issued.
See also "Stock Repurchase".
Outstanding stock, purchased by the corporation, is known as treasury stock.
The reasons as to why corporations buy back their outstanding stock include:
☺to increase earnings per share and return on equity
☺to provide tax efficient distributions of excess cash to shareholders
☺to provide stock for employee stock compensation contracts
☺to thwart takeover attempts
☺to create or improve the market for the stock
^_^
Wiki User
∙ 14y ago
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