FTSE firms ‘cannibalising’ accounts to boost shareholder dividends

Britain faces repeat of Carillion collapse because big firms ‘cannibalise’ balance sheets to boost dividends, warns report

Britain faces a repeat of the Carillion collapse because big companies have ‘cannibalised’ their balance sheets to boost dividends to shareholders, a report has warned. 

Firms have increasingly focused on artificially driving up share prices using debt and takeovers, says think-tank Productivity Insights Network.

It said the rate of increase in dividends and share buybacks over the past decade, which have totalled £1trillion in that time, had far exceeded the rate of profit growth. 

Concern: Firms have increasingly focused on artificially driving up share prices using debt and takeovers

Professor Richard Murphy, one of the authors of the report, said: ‘Businesses that pay out more than they earn cannot survive in the long term. 

‘What is happening in this country, in the FTSE, is a recipe for a flood of corporate failures like Carillion.’ 

Greedy bosses, corporate cover-ups, excessive dividends and accountancy failures were blamed for the failure of the construction giant in 2018.