[Nbkna2c]

What would be the tackle reason for a corporation to reissue treasury stock? It doesn’t pay dividends and I think you don’t have voting rights. What’s the appeal for investor/issuer? Is it for things like business strategies like staving off a hostile takeover and giving a certain investor or group of investors favorable ownership percentages? Thanks all and good luck!

BEC 78
REG 84
AUD 76
FAR 83

[2/15 n/30]

Treasury stock is only stock that a company buys back. A company can't own itself, that's why treasury shares don't have voting rights and dividends. However once they sell it, it just becomes normal outstanding common stock to whom ever buys it.

Companies buy back their shares for a number of reasons. One of the reasons may be to increase their stock price (less shares outstanding means less supply means higher price), stop a hostile take over, or give the treasury stock to their employees as compensation

Bec: 8/31/12
Aud: 8/1/12
Reg: 76
Far: 73

[Whyme]

If they sell T-stock at a price higher than what they bought it at don't they also make a profit?

AUD- 71, 73, 87 Done!!!!!
BEC- 75
FAR- 72, 77
REG- 77

[2/15 n/30]

It's not considered profit because it never hits the income statement. Under both cost and par method any excess over the cost of buying back the shares or the par value of C/S goes to APIC-T/S or APIC-C/S, respectively.

Bec: 8/31/12
Aud: 8/1/12
Reg: 76
Far: 73

[Nbkna2c]

2/15 n30, great clairification thanks! That clears up a few other questions I had as well! Good luck on your exams!

BEC 78
REG 84
AUD 76
FAR 83

[Author]

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