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CFO Survey

Survey: No Clear Consensus in Stabilization but CFOs Anticipate Economic Recovery within Next Two Years

  • CFOs’ Confidence Boost in Obama, but Reveal Displeasure with Geithner Performance

  • Decreased Hiring Signals Bleak Prospects for Recent Graduates and Interns

FLORHAM PARK, N.J. and NEW YORK, June 23, 2009 - Chief financial officers’ confidence in the U.S. economy saw signs of improvement for the first time in over two years, but revealed declined optimism toward their own companies, according to the most recent survey of CFOs conducted by Financial Executives International (FEI) and Baruch College’s Zicklin School of Business. While CFOs are taking a cautious approach in regard to capital spending and hiring, they see light at the end of the tunnel, forecasting an end to the current recession by 2011.

In the 2009 second quarter "CFO Outlook Survey," the CFO Optimism Index for the U.S. economy, while still down 43 percent from its 2004 high (73.55), reported an increase for the first time in 28 months (41.90) after hitting a survey all-time low of 38.96 last quarter. Despite the reported heightened sense of optimism in the overall economy, financial prospects for one’s own company plummeted to a survey all-time low, dropping approximately 7.5 points to 51.44 from 58.93 in the previous quarter. CFOs continue to take precautionary measures to initiate cutbacks in the areas of capital spending, hiring and product pricing over the next 12 months.

“The sentiment of CFOs this quarter can best be described as ‘cautious optimism,’ and at this point, there is no clear consensus among chief financial officers as to whether the conditions have in fact stabilized,” said John Elliott, Dean of the Zicklin School of Business at Baruch College. “Though we saw noticeable signs of concern this quarter from CFOs toward their respective companies’ financial prospects, their increased optimism in the overall economy for the first time since 2007 gives us the first indication of a potential recovery.”

CFOs See Increased M&A Opportunities but Still Some Difficulties in Lending/Credit

CFOs this quarter also revealed a mixture of positive and negative views. Demonstrating positive signs in the market, over a quarter (27%) of CFOs have increased their interest in making acquisitions. Furthermore, more than a quarter (28%) feel the economy has already stabilized, with an overwhelming majority (90%) anticipating an economic recovery by the first half of 2011, or before. When asked what signs of stabilization they are noticing at their company, 33 percent of CFOs expect to report positive earnings for the second quarter. CFOs also cited positive first quarter earnings (28%), increased cash flow over the previous quarter (21%), and increased consumer demand (13%) as signs of improvement.

“It is apparent that growth opportunities are manifesting, as CFOs increased their interest in mergers and acquisitions,” said Marie Hollein, CEO and President, Financial Executives International. “Amidst this challenging environment, CFOs do point to some signs of stabilization including increases in both cash flow and consumer demand, implementation of layoff alternatives, and higher expectations for positive second quarter earnings. However, it is clear that the road to recovery is far from over.”

More than half (56%) stated they are spending cautiously, while approximately one quarter are holding off on all, or nearly all, capital investments (28%). In terms of lending, nearly nine out of 10 (87%) CFOs reveal that amounts being lent have either decreased or gone unchanged, whilst more than a third (34%) believe it will become increasingly difficult to access credit over the next six months. Although 34 percent feel credit is still difficult to access, it has loosened in comparison to third quarter 2008 findings (67%).

President Obama Steadily Gaining CFOs’ Confidence, Skeptical of Geithner’s Performance

In the previous quarter’s survey, CFOs weighed in on their sentiments toward President Barack Obama’s performance and their thoughts on the first 100 days of his Administration. On a positive note, more than twice as many respondents (23%) expressed heightened optimism this quarter compared to last quarter (9%). While nearly half (47%) stated their confidence in the economy has weakened, this signals a sharp decline from the number of CFOs who expressed unfavorable opinions toward the Administration in the first quarter (58%).

At the same time, CFOs’ sentiments toward the leadership of Treasury Secretary Timothy F. Geithner and his response to the current financial situation in the U.S. were less than favorable. When asked to rate Geithner’s performance, 43 percent of respondents assigned him a “C” grade and nearly three-fourths of respondents (73%) assigned him a “C” grade or worse. By comparison to his predecessor, CFOs viewed former Treasury Secretary Henry Paulson’s performance as satisfactory, with over half (55%) issuing him at least a “B” grade in the third quarter 2008.

Bleak Prospects for College Graduates and Paid Summer Interns; Current Employees Also Impacted

CFOs are witnessing signs of stabilization at companies where layoffs did not occur this quarter (30%). However, the findings are not as promising for recent graduates entering the work force or for paid summer interns. Of the CFOs surveyed whose companies have historically hired recent graduates, nearly all (95%) have either hired less, or the same amount as the previous year. Accordingly, only 5 percent of respondents reveal that their company is hiring more recent graduates. In comparison, of the companies that have historically hired paid summer interns, approximately 61 percent are hiring less, and only 8 percent are hiring more.

The current economic environment is not only affecting individuals seeking work, but also those who are currently employed. Over one quarter (28%) of respondents specified the work week at their companies was reduced, and 21 percent revealed their companies had expanded offerings of early pensions and other retirement incentives, whilst only 17 percent saw furloughs implemented at their companies. Forty-seven percent of respondents specified other options, including salary reductions, unpaid vacations, pay raise stalls and preferences to hold onto experienced personnel.

Overview of the Survey:

Additional topics CFOs were surveyed on include their risk management programs and shareholder advisory vote and compensation packages. Full survey results and historical data comparisons are available at or from Nicole Madison at The study is also available online at the Financial Executives Research Foundation bookstore.

This quarter, the CFO Outlook Survey, conducted by Financial Executives International and Baruch College’s Zicklin School of Business, interviewed 266 corporate CFOs electronically from June 1 through 8. CFOs from both public and private companies and from a broad range of industries, revenues and geographic areas, including some off-shore companies, are represented. Survey respondents are members of Financial Executives International.

Financial Executives International has been conducting surveys gauging the country’s economic outlook from the perspective of CFOs for more than 11 years.

About FEI

Financial Executives International (FEI) is the leading advocate for the views of corporate financial management. Its 15,000 members hold policy-making positions as chief financial officers, treasurers, and controllers. FEI enhances member professional development through peer networking, career planning services, conferences, publications, and special reports and research. Members participate in the activities of 84 chapters, 73 of which are in the United States and 11 in Canada.

Financial Executives Research Foundation (FERF) is the non-profit 501 (c)(3) research affiliate of FEI. FERF researchers identify key financial issues and develop impartial, timely research reports to FEI members and non-members alike, in a variety of publication formats.

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About Baruch

Baruch College is a senior college of the City University of New York. The Zicklin School of Business at Baruch College is the largest and most diverse AACSB accredited collegiate school of business in the nation. Baruch has a long tradition of producing accounting and finance graduates who become leaders as CPAs.

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Media Contacts: Nicole Madison of FD +1-212-850-5647; Kristen Lewko of FD +1-212-850-5756