  a treasury stock or reacquired stock is stock which is bought back by the issuing company, reducing the amount of outstanding stock on the open market ("open market" including insiders' holdings). stock repurchases are used as a tax-efficient method to put cash into shareholders' hands, rather than paying dividends, in jurisdictions that treat capital gains more favorably. sometimes, companies do it when they feel that their stock is undervalued on the open market. other times, companies do it to reduce dilution from incentive compensation plans for employees. another motive for stock repurchase is to protect the company against a takeover threat. the united kingdom equivalent of treasury stock as used in the united states is treasury share. treasury stocks in the uk refers to government bonds or gilts. ==limitations of treasury stock== *treasury stock does not pay a dividend *treasury stock has no voting rights *total treasury stock can not exceed the maximum proportion of total capitalization specified by law in the relevant country when shares are repurchased, they may either be canceled or held for reissue. if not canceled, such shares are referred to as treasury shares. technically, a repurchased share is a company's own share that has been bought back after having been issued and fully paid. a company cannot own itself. the possession of treasury shares does not give the company the right to vote, to exercise preemptive rights as a shareholder, to receive cash dividends, or to receive assets on company liquidation. treasury shares are essentially the same as unissued capital and no one advocates classifying unissued share capital as an asset on the balance sheet, as an asset should have probable future economic benefits. treasury shares simply reduce ordinary share capital. ==buying back shares== ===benefits=== in an efficient market, a company buying back its stock should have no effect on its price per share valuation.  if the market fairly prices a company's shares at $50/share, and the company buys back 100 shares for $5,000, it now has $5,000 less cash but there are 100 fewer shares outstanding; the net effect should be that the underlying value of each share is unchanged. additionally, buying back shares will improve price/earnings ratios due to the reduced number of shares(and unchanged earnings) and improve earnings per share ratios due to fewer shares outstanding (and unchanged earnings). if the market is not efficient, the company's shares may be underpriced. in that case a company can benefit its other shareholders by buying back shares. if a company's shares are overpriced, then a company is actually hurting its remaining shareholders by buying back stock. ===incentives=== one ot
Corporate_finance Generally_Accepted_Accounting_Principles Stock_market