What accounts for the difference between issued shares and outstanding shares?

The difference between issued shares and outstanding shares is accounted for by treasury stock. Issued shares refer to all shares created and distributed by the company, while outstanding shares are those that are currently held by shareholders, including both institutional and retail investors. Treasury stock consists of shares that have been repurchased by the company and are held in its treasury, which means they are not currently considered outstanding.

When a company buys back its own shares, it reduces the number of outstanding shares because those repurchased shares are removed from circulation and are not available to the public. This affects various financial metrics, such as earnings per share (EPS), because the total number of shares that earnings are divided by decreases when shares are held as treasury stock. Treasury stock does not have voting rights or entitlement to dividends, thus it is not included when calculating the total outstanding shares, leading to the discrepancy between issued and outstanding shares.