I learned that Treasury stock is shares of a corporation's stock that have been issued and then
Question:
I learned that Treasury stock is shares of a corporation's stock that have been issued and then reacquired, but not canceled. Usually, when companies buy back stock they then may sell it a second time but only to employees that work at the company. Although these stocks ultimately have no value to them, they do not receive dividends and have no voting rights. Usually treasury stock may be left aside to be used for future purposes such as paying for an investment. Treasury stock matters because when stocks are repurchased by the company the number of outstanding shares is lowered and the remainder of the shareholders in the company have an increase in value. The good that treasury stock can do for a company depends on the company's objectives. For example, if the market is not performing well, the company's stock may be undervalued, and in order to boost the share price so that it can also benefit the remaining shareholders the company can repurchase their stock as treasury stock.
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta