Final answer:
Treasury stock is stock that was issued by a firm and then repurchased, held by the company for various purposes but not retired. It does not confer voting rights or the right to dividends and reduces the public float of shares.
Step-by-step explanation:
Treasury stock refers to shares of a firm's stock that were issued and later reacquired by the company itself. The key point about treasury stock is that it is not retired; instead, it is held by the company and can be used for various purposes, such as stock-based compensation, to raise capital or to consolidate ownership. The repurchased shares do not confer any ownership voting rights or the right to receive dividends and are not included in the distribution of earnings.
When a firm issues stock, it is selling off ownership of the company to the public, and along with that comes a commitment to its shareholders and typically the establishment of a board of directors. The shareholders, or those who buy the stock, represent a partial ownership; even though they do not necessarily control the company, especially in large and well-known firms where ownership is widely spread among many investors. On the other hand, treasury stock represents a company rebuying its own shares and thereby reducing the number of shares held by the public.