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CFO Survey

Survey: CFOs' Economic Confidence Plummets 19% From One Year Ago, Due to Increased Recession Fears

CFOs View Economy, War, Taxes as Top Priorities When Evaluating Presidential Candidates

  • 4 Out Of 5 CFOs Believe Companies Should Not Provide Quarterly Earnings Guidance

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FLORHAM PARK, N.J. and NEW YORK, January 30, 2008 — CFOs of American companies’ economic confidence plunged more than 10% since last quarter, moving to 19% below where it stood at this time last year, according to a recent survey of CFOs conducted by Financial Executives International (FEI) and Baruch College's Zicklin School of Business.

In the 2007 fourth quarter "CFO Outlook Survey” the CFO Optimism Index for the U.S. economy was 56.26, dropping significantly to fall even further past last quarter’s three-year low of 62.85. This quarter, nearly 100 percent of the CFOs are as concerned, or more, about recession than last quarter, while over 95 percent report being as concerned, or more, about inflation than they were last quarter.

CFOs’ outlook toward their own companies decreased again this quarter, as the Optimism Index of CFOs’ own companies sank to 70.26, 1.4 points lower than last quarter’s 71.68, which itself was a three-year low.

Top Election Issues

CFOs cited the economy as the issue of utmost importance when evaluating prospective Presidents. When CFOs were asked what, in their view, were the top priority issues when evaluating the 2008 U.S. Presidential candidates, 72 percent selected the economy. The second and third most frequently-cited priorities were the war in Iraq and taxes, which were each cited by 34 percent of CFO respondents. Other responses in descending order were terrorism (19%), healthcare costs (17%), immigration (11%) and social security (5%).

"It is clear that the state of the economy is the number one thing on everyone’s mind, and CFOs of course are no exception, from how they will choose the next leader of our nation, to what keeps them up at night,” said John Elliott, Dean of the Zicklin School of Business at Baruch College. “Volatility in the financial markets and crisis in the credit industry, paired with weakness of the dollar have led to real and immediate concerns by CFOs about recession and inflation.”

2008 Economic Worries

CFOs believe the top economic worries for 2008 are economic growth and consumer spending. Over 47 percent of those CFOs surveyed consider economic growth to be the biggest economic worry. Consumer spending and demand was the second most selected economic worry, cited by 30 percent of CFOs. Interestingly, while topping the list of priority issues with regard to selecting a presidential candidate, the Iraq War did not top CFOs’ list of economic worries, with only 0.6 percent of respondents believe the Iraq War will be a top economic worry in 2008.

“It appears we have moved from a position of possibility to one of certainty as continued signs of weakness permeate the U.S. economy,” said Michael P. Cangemi, FEI President and CEO.
“We are dealing with one of the toughest economies in the last decade and CFOs have certainly had their finger on the pulse as we have watched their optimism towards the U.S. economy continue to drop nearly twenty percent over the past four quarters.”

Additional Data:
Quarterly Earnings Guidance

An overwhelming majority of CFOs at public companies believe that providing quarterly earnings guidance pressures companies to manage market expectations on a quarterly basis and monopolizes management time. When asked if they agreed with the recent recommendation of the Paulson committee and others, proposing that companies stop providing quarterly earnings guidance, 81 percent CFOs surveyed replied in the affirmative.

Semi-Annual Financial Reporting

CFOs surveyed support changing the regulatory law to allow for reporting on a semi-annual basis, similar to the UK principle. 60 percent of CFOs said they would support changing to semi-annual financial reporting in the U.S.

Corporate Tax Code

When asked what aspect they would choose to adjust if they could rewrite the corporate tax code, 3 out of 5 CFOs were in agreement with recommendations made in the Tax Reduction and Reform Act of 2007, recently introduced by Rep. Charles Rangel (D-N.Y.), which proposes a reduction in the corporate tax rate. Twenty-one percent of the CFOs surveyed would adjust the capital gains, while just 4 percent would change the carried interest rate.

About the Survey

Full survey results are available at or from Jamie Renninger at

This quarter, the CFO Outlook Survey, conducted by Financial Executives International and Baruch College's Zicklin School of Business, interviewed 361 corporate CFOs electronically the week of January 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 nine 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 86 chapters, 75 of which are in the United States and 11 in Canada. For more information about FEI, visit

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 and CFOs.

MEDIA CONTACT: Jamie Renninger of FD +1-212-850-5658