Treasury stock

Treasury stock are shares that have been issued by a firm, but are being kept ‘in treasury’ - ie they are being kept for possible subsequent reissue.

Treasury stock are shares that have been issued by a firm, but are being kept in treasury'. This just means they are being kept for possible subsequent reissue. The reasons vary. It might be that the firm has done a share buyback (to boost earnings per share and return cash to shareholders) but doesn't want to cancel the shares it is buying back. Or perhaps the shares are being kept to one side to be used as part of an employee remuneration deal later.

These treasury shares don't carry voting rights and don't pay dividends and should not normally be used in ratio calculations such as earnings per share. The main advantage of them is that the company has already gone through the administrative hassle of issuing them. This makes a subsequent issue cheaper and faster than a full issue of brand new shares, which is the only option once shares are cancelled.

Recommended

Resource curse
Glossary

Resource curse

The term “resource curse” refers to the observation that countries with abundant natural resources also tend to be less economically developed than th…
14 Jan 2021
Balance of payments
Glossary

Balance of payments

The balance of payments refers to the accounts that sum up a country's financial position relative to other countries.
8 Jan 2021
Yield-curve control
Glossary

Yield-curve control

Yield-curve control is when a central bank aims to control long-term interest rates by pledging to buy (or sell) as many long-term bonds as needed to …
25 Dec 2020
Intangible assets
Glossary

Intangible assets

An intangible asset is anything that a company owns that isn’t physical.
25 Sep 2020

Most Popular

The FTSE 100 is set for a makeover with an influx of new tech stocks
UK stockmarkets

The FTSE 100 is set for a makeover with an influx of new tech stocks

The FTSE 100 – the dullest index in the world – is about to reinvent itself as a host of new firms list on the market. The change is long overdue, say…
24 Jan 2021
Think Tesla is a bubble? This might be the best way to bet on it bursting
Oil

Think Tesla is a bubble? This might be the best way to bet on it bursting

The huge rise in Tesla’s share price means that, by market value, it’s now the sixth-largest company in the US and and the world’s biggest car-maker. …
25 Jan 2021
Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021