The department says while there are a number of valid reasons why a company would use share buyback schemes, there are concerns that some companies are using them to inflate executive pay which is crowding out investment.

It has appointed PwC to undertake the research into share buybacks with support from Alex Edmans, professor of finance at the London Business School. The findings, covering how companies use share buybacks and whether any further action is needed to prevent them from being misused, will be published later this year.

BEIS said this review is part of the broader package of corporate governance reforms announced in August 2017 to address concerns that executive pay can sometimes be disconnected from company performance.

By Pat Sweet