Treasury stock

Treasury Stock

A corporation’s own shares that have been issued, repurchased, and are held in the treasury. These shares don’t receive dividends, have no voting rights, and reduce shareholders’ equity on the balance sheet.

For instance, if a company with 1 million outstanding shares repurchases 50,000 shares at $20 each, it would record $1 million as treasury stock (a contra-equity account), reducing total shareholders’ equity.

Companies repurchase their stock to return excess capital to shareholders, increase earnings per share by reducing shares outstanding, provide shares for employee stock options, or prevent hostile takeovers. Treasury shares can be retired or reissued, giving management flexibility in managing capital structure.