Advertisement

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.

Advertisement - Article continues below

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.

Advertisement
Advertisement

Recommended

Visit/glossary/bonds
Glossary

Bonds

A bond is a type of IOU issued by a government, local authority or company to raise money.
19 May 2020
Visit/spending-it/glossary/601300/quantitative-investing
Glossary

Quantitative investing

Quantitative investing uses sophisticated computer-based mathematical models to identify and carry out trades.
8 May 2020
Visit/glossary/quantitative-easing-qe
Glossary

Quantitative easing (QE)

Quantitative easing (QE) involves electronically expanding a central bank's balance sheet.
8 May 2020
Visit/glossary/600702/emerging-markets
Glossary

Emerging markets

An emerging market is an economy that is becoming wealthier and more advanced, but is not yet classed as "developed".
24 Jan 2020

Most Popular

Visit/economy/eu-economy/601422/heres-why-investors-should-care-about-the-eus-plan-to-tackle-covid-19
EU Economy

Here’s why investors should care about the EU’s plan to tackle Covid-19

The EU's €750bn rescue package makes a break-up of the eurozone much less likely. John Stepek explains why the scheme is such a big deal, and what it …
28 May 2020
Visit/investments/stockmarkets/601423/as-full-lockdown-ends-what-are-the-risks-for-investors
Stockmarkets

As full lockdown ends, what are the risks for investors?

In the UK and elsewhere, people are gradually being let off the leash as the lockdown begins to end. John Stepek looks at what risks remain for invest…
29 May 2020
Visit/economy/global-economy/601420/james-ferguson-the-virus-the-lockdown-and-what-comes-next
Global Economy

The MoneyWeek Podcast: James Ferguson on the virus, the lockdown, and what comes next

Merryn talks to MoneyWeek regular James Ferguson of Macrostrategy Partnership about what's happened so far with the virus; whether the lockdown was th…
28 May 2020