Question

please do a little research and find out something about treasury stock. Find out the ramifications of a company repurchasing their own stock. What effect does that have? Are there any issues surrounding treasury stock?

If you use an outside source (totally fine), please make sure you cite the source.

Remember all original posts need to be between 150-500 words.  

Answer 1

A treasury stock or reacquired stock is stock which is bought by the issuing company, reducing the amount of outstanding stock on the open market.

The treasury stock account represents money the company has spent to buy back its own shares. Treasury stock is s contra equity account, meaning that it acts as an offset to the common stock account.

In and itself, treasury stock doesn't have much value. These stocks do not have voting rights and do not pay any distributions.

In certain situations, the organization may benefit from limiting outside ownership. Reacquiring stock also help raise the share price, providing investors with an immediate reward.