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FTSE firms ‘cannibalising’ accounts to boost shareholder dividends

Report warns Britain faces repeat of Carillion collapse because big companies ‘cannibalise’ balance sheets to boost dividends to shareholders

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.

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

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. 

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.

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