THE public should have sought a long time ago the implications of treasury shares on the financials of listed companies. They should have also asked why shares bought back by listed companies remain, for a certain period of time, an entry under stockholders’ equity when these should have been deemed “retired” from the time they have been reacquired from the public.

In practice, shares that are bought back and become treasury shares are not automatically treated as “retired.” The majority stockholders who control the board decide whether to retire them or reissue them. If they go for the latter, they wait for a good market when their company’s share price goes up to a certain level that would make the reissue more profitable.

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