What happens when a firm purchases its own shares as treasury stock?

When a firm purchases its own shares as treasury stock, those shares are removed from circulation and held by the company itself. This can lead to a reduction in the total number of outstanding shares, potentially increasing earnings per share (EPS) and the value of remaining shares. Treasury stock does not pay dividends or have voting rights, and it can be reissued or retired in the future, depending on the company's strategy. Overall, this action can signal confidence in the company's value or be used for stock-based compensation plans.