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Finance Glossary

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Treasury Stock

Definition:

The stocks or shares a company holds in its own treasury or for itself.

It's usually stock the company has bought back, but it can be stock that was never sold in the first place. There are no dividends paid, no voting rights (since no one really "owns" the stock), and the stock isn't included in the company's shares outstanding.

Why keep treasury stock? Two reasons.

First, if they think they might want to raise money later on, the company has these stocks at the ready to sell. Second, the stocks in reserve give them enough stocks to keep lots of ownership in the company.