Repurchased own shares-asset or reduction in equity?

Petko Zahariev ()
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Petko Zahariev: University of Economics Varna, Bulgaria

Economics and computer science, 2024, issue 1, 11-17

Abstract: The main goal of the study is to discuss the different points of view regarding repurchased own shares as a reporting object, emphasizing the author's opinion on this matter. Based on the study of different points of view advocated by the different accounting systems and in the system of European commercial law, the conclusion of ambiguity in their accounting treatment in a historical aspect is reached, and in conclusion, the capital approach is advocated as a modern and consistent one. The study is limited only to the accounting of corporations as stock issuers, as well as to the statutory regulations of only the two main accounting bodies-FASB and IASB. In the course of the research, special attention was also paid to the managerial and financial considerations motivating the act of share buyback, as well as to some limitations and disadvantages of this financial operation. The thesis advocates that the choice of option for reporting and presentation of the repurchased shares is largely based on the specifics of the relevant legal system (a continental or European (Romano-Germanic) legal family based on the continental legal system or a family of common law based on common (Anglo-Saxon) law and precedent and its relationship with the adopted accounting model. The study utilizes methods of observation, investigation, comparison, induction, and deduction, research and analysis of publications from the scientific community, as well as the relevant accounting regulations developed by the FASB and the IASB, and a number of sources of European commercial law. In a practical aspect the research would be useful for business practice, reflecting the importance of share buybacks by corporations both globally and nationally.

Date: 2024
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