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CFO Survey

Survey: Effects of Financial Crisis Broaden as CFOs Report Plans to Cut Spending


  • Strong Support Among CFOs for Bailouts, Increased Regulation

FLORHAM PARK, N.J. and NEW YORK, October 30, 2008 — CFOs of American companies revealed ever-increasing uneasiness about the current economic crisis and its evident impact on their businesses, as optimism toward both the U.S. economy and their own companies continued to sink to all-time lows in the third quarter, according to the most recent survey of CFOs conducted by Financial Executives International (FEI) and Baruch College's Zicklin School of Business.

The CFO Optimism Index for the U.S. economy continued its plummet past last quarter’s all-time low to 41.73 - the 7.19 point plunge being the largest quarterly decline in the history of the survey. CFOs' outlook toward their own businesses, while higher than their overall economic outlook, also experienced a sharp decline; the Optimism Index for CFOs' own companies fell to 61.74, a 5.32 point drop from last quarter’s all-time low.

“Our survey shows a continued, increasing loss of confidence by these CFOs and, for the first time in several years, they are actually reporting year-over-year reductions in capital investments, technology spending and hiring,” said John Elliott, Dean of the Zicklin School of Business at Baruch College.

“While expected allocations have been trending down for several quarters, they had continued to report planned increases in these categories through the first half of 2008.” The survey revealed that CFOs anticipate access to credit to continue to tighten, with a majority of respondents (67%) predicting it will be increasingly difficult for their companies to access credit over the next six months. As a result, CFOs are taking precautionary measures to initiate cutbacks in the areas of technology spending, capital spending, hiring and inventory over the next 12 months (approximately 1%), compared with consistent plans for increases in spending over the last 2 years.

As the U.S. nears the final days to the 2008 Presidential election, a majority of CFOs continue to support Republican Party nominee Senator John McCain as the candidate whose presidency would be best for their companies. When asked which candidate, if elected to office, would be most beneficial to their company overall, an overwhelming majority of CFOs selected McCain (62%), while only 15 percent chose Democratic party nominee Senator Barack Obama. When compared with results from the second quarter survey, this represents a small decrease in McCain’s popularity among CFOs and a small increase for Obama’s (71% selected McCain and 13% selected Obama).
In contrast, CFOs seem less confident in the candidates’ abilities to help the U.S. economy.

When CFOs were asked which candidate, if elected to office, would be most beneficial to resolving the current economic crisis, over a quarter of respondents (26%) felt that neither candidate would be able
to solve the crisis. Nearly half (46%) of CFOs put their faith in McCain’s abilities, while approximately 19 percent felt that Obama could best resolve the economic crisis.

Additional Data: CFOs Support Government Bailouts, Increased Regulation

The third quarter Outlook Survey polled CFOs amidst some of the biggest financial headlines to dominate the news in recent times, including government bailouts of major financial institutions and the subsequent call for greater regulation, as well as the U.S. House of Representatives' vote on the Emergency Economic Stabilization Act of 2008 (EESA).

“On average, CFOs’ responses to the third quarter survey agreed with many of the recent economic actions taken by the government,” said Cheryl de Mesa Graziano, Vice President, Research and Operations for Financial Executives Research Foundation, the research affiliate of FEI. “As a group
who deals with complex financial issues on a daily basis, they expressed support for recent government bailouts and increased regulation in the financial sector, but had some very specific ideas of their own in terms of what that regulation should include.”

When asked about their opinion on government financial institution bailouts, such as those recently seen with Bear Stearns, Freddie Mac, Fannie Mae and American International Group (AIG), nearly three quarters (72%) agree that the government should assist such institutions, and agree that it was
reasonable not to support Lehman while supporting Bear Sterns. Another 13 percent of respondents felt that government bailouts should be done strictly on a consistent basis, and about a quarter of respondents (15%) felt that the government should not intervene in these situations.

A strong majority of CFOs (80%) felt that increased regulation and oversight is needed in the financial sector. When asked about what immediate regulatory actions they would put in place in response to the market crisis, CFOs were quite vocal. Nearly half of respondents (46%) felt that a ban on mark to market accounting except for publically traded stock with real liquidity was needed, and more than a third of CFOs (35%) felt that regulators should institute permanent restrictions of short selling for all companies. Nearly a quarter of respondents (23%) provided additional suggestions on immediate regulatory actions, such as the regulation of hedge funds and credit default swaps and the reinstitution of mortgage lending standards.

CFOs Support Federal Bailout Plan & Paulson’s Performance; Cost to Taxpayers High

CFOs were also overwhelmingly in favor of the federal bailout plan, with 82 percent of respondents agreeing with the U.S. House of Representatives’ decision to pass the plan on October 3, 2008. When asked about the likely ultimate cost of the bailout plan on the American taxpayer, approximately
two thirds (68%) of respondents feel that the cost would be less than $500 billion, and 25 percent expect the final tally to be $100 billion or less.
Overall, American CFOs view Henry Paulson’s performance in recent weeks as satisfactory. When asked to rate the performance of the U.S. Treasury Secretary with regard to his recent actions in responding to the current U.S. financial situation, over half (55%) issue him at least a “B” grade for his
overall performance while another 30 percent give him a “C” rating.

CFOs Predict Interest Rates to Stabilize by Q3 2009

On average, CFOs appear optimistic that interest rates will be fairly stable over time. When asked about their predictions on the federal funds rate (which was 2% at survey distribution) CFOs responded that the rate would lower approximately a half point (1.62) by April 2009, but would increase back to 2% by October 2009. When CFOs were asked to give their predictions on the LIBOR/Treasury spread a year from now (October 2009), more than half (58%) expect that the spread would narrow.

About the Survey

Full survey results are available at or from Nicole Madison at

This quarter, the CFO Outlook Survey, conducted by Financial Executives International and Baruch College's Zicklin School of Business, interviewed 219 corporate CFOs electronically the week of July 7. 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 the past ten 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. For more information about FEI, visit

About Baruch College

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 and CFOs. Visit to find out more.

MEDIA CONTACT: Nicole Madison of FD +1-212-850-5647