And as for "gearing" and "leverage" - it is precisely this phenomenon that is the direct cause of asset price inflation.

"Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky

I believe the average company in the S&P 500 is earning about 15--16% return on its assets--basically total assets minus short term liabilities like accounts payable.  and that calculation is after-tax.  I believe such a company can borrow on the markets, issue corporate bonds, with an interest rate of roughly 7%.  So the company can borrow money at 7% to finance its growth in its business, which will yield a 15% return.  But there is an additional benefit because the interest on the bond is tax deductible.  Assuming the 35% corporate tax rate, this means that the after tax interest cost is 4.55%.  So this is very favorable for the owners of the company, the stockholders--borrowing money at 4.55% and earning a 15% return on those borrowed funds.  The alternative of issuing more shares to raise the money would dilute the ownership position of current shareholders, and they would get a smaller % of the growing pie (earnings pie, I guess?).

If the company is in a reasonably stable business, I think most people would be comfortable if they borrowed up to, say, 20% of their capital structure--so the company is financed with 80% equity and 20% borrowings.  Thus the Return on Equity is higher than the Return on Assets--they are earning the 15% ROA on the total capitalization, but the bondholders are happy with 7% (which is 4.55% to the company), leaving the extra 10.45% (15%-4.55%) to be spread to the shareholders, either in dividends are share price growth.

But what I left out in my comment is that there is too much of a good thing.  If a company raises its debt/equity ratio to much, say to 50%, it can put itself into a very risky position (not unlike the subprime borrowers of today).  Stuff happens in business, and things don't always go to plan.  You're legally commited to make those bond payments.  If your earnings fall perilously close to what the interest payments are, there are covenants and you may find other people coming in to run your business and restricting your efforts to safeguard the bondholders at the expense of the shareholders--as they should, btw, bond holders are assuming they have much less risk than shareholders.

so it's better if management is prudent, and successful.  Generally company share prices will fall and remain under pressure if it lets its debt/equity ratio get too high--a "good' thing can become a bad thing, if misused, or some unforseen circumstance occurs.