Treasury Stock

Accounting Dictionary

Treasury Stock

Treasury Stock is stock that the company buys back for its own use.

If Exxon called up its broker and asked him to buy 10,000 shares of Exxon stock on the New York Stock Exchange, that stock would be called treasury stock. It is held in the company’s treasury and used for the company’s stock purchase plans and to reward loyal employees. Buying back large quantities of company stock can create a shortage of stock on the open market which would tend to increase the market price of the common stock. Companies sometimes cancel that stock or keep it in the treasury for a long time just to make the price of the stock go up.

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