When a company reacquires, or "buys back" its own shares and removes them from the trading markets. [@bantonShareRepurchaseWhy]

History

Prior to 1982, stock buybacks where considered a form of market manipulation. Under the Reagan administration however, a "safe harbor" rule called 10b-18 was implemented in order to allow for companies to have a controlled method in order to buyback stock. It provides rules and regulations regarding the methods and prices set to perform a stock buyback. [@Rule10b18Definition]

Consequences

Since the implementation of this rule, this has allowed companies who have excess capital to reinvest their profits into their own stock, increasing the value. The value increases in two major components; decreasing the existing supply of stock which increases the remaining stock's value and it signals to investors that the company is Bullish in itself and that will also cause the stock to rise. [@BuybackWhatIt]

This combined with Jack Welch's management strategies are some of the primary reasons we have seen such a rise in consolidation of wealth and power within many corporations and industries.