What can negatively impact the balance sheet under stockholders' equity?

The correct option, which pertains to the negative impact on the balance sheet under stockholders' equity, is the buyback of treasury stock. When a company repurchases its own shares, it reduces the total stockholders' equity reported on its balance sheet. This reduction occurs because treasury stock is recorded as a contra-equity account, which means it is subtracted from total equity. As a result, this transaction decreases both the cash on hand and the equity available to shareholders, thereby negatively impacting the overall balance sheet.

In contrast, issuing new stocks generally increases stockholders' equity since it demonstrates a flow of funds into the company, enhancing the capital base. Retaining earnings contributes positively to stockholders' equity as it means that profits are reinvested in the business rather than distributed as dividends, which ultimately supports growth. Paying dividends, while it does reduce retained earnings, does not have the same immediate contra-equity effect as treasury stock buybacks, since the remaining equity still reflects the company's value even after dividends are distributed. Thus, the buyback of treasury stock distinctly stands out as a direct reduction of stockholders' equity.