Soaring company share buybacks raises corporate leverage, warns BIS

London

SOARING company share buybacks have been a major contributor to the equity bull market in the past decade.

But the Bank for International Settlements (BIS) warns that the policy has raised corporate leverage, that is, the proportion of borrowings in companies' balance sheets. Although buybacks were not the sole cause, high leverage has been a major reason for business failures and bailouts and a general downturn in profits during the Covid-19 pandemic.