sharerepurchase

A share repurchase, or stock buyback, is a corporate action in which a company buys back its own outstanding shares from the market or directly from shareholders. The repurchased shares may be held as treasury shares, retired, or reissued later, reducing the number of shares outstanding and altering ownership and voting power.

Repurchases can be conducted through open-market purchases, tender offers, Dutch auctions, or private negotiated deals. Open-market programs resemble normal trading and do not specify a price or quantity, while tender offers set a price and number of shares, Dutch auctions involve a price range, and private deals involve negotiations with specific sellers.

Accounting for buybacks typically treats repurchased shares as equity reductions. In many jurisdictions, treasury shares are recorded at cost and reduce total equity; they generally do not have voting rights or receive dividends until reissued. If the shares are later reissued, accounting may affect additional paid-in capital and retained earnings, depending on jurisdictional rules such as US GAAP or IFRS.

Purposes for buybacks include returning capital to shareholders, signaling confidence in the company’s prospects, offsetting dilution from stock-based compensation, and improving financial metrics such as earnings per share (EPS) and return on equity, as well as adjusting the capital structure.

Regulatory and governance considerations commonly require prior board approval, disclosure of the program, and adherence to limits on the percentage of shares that may be repurchased. Buybacks can affect stock price and control dynamics and are subject to critique that funds used for repurchases could otherwise support investment, dividends, or growth.