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CFO Survey


Cap Ex to Rise, Hiring Plans Remain Unchanged

Say Fed Should Hold Steady on Rates

FLORHAM PARK, N.J. and NEW YORK, June 22, 2006 — Prices of products will increase an average of 3.3% over the next twelve months, according to CFO forecasts in this quarter’s “CFO Outlook Survey,” conducted by Financial Executives International (FEI) and Baruch College’s Zicklin School of Business.

Three-quarters (76%) of the 207 surveyed CFOs expect their companies to raise prices, a slight increase over the 71% projecting price increases in the first quarter’s survey.  However, last quarter, the average forecast was an increase of 1.5%, about half the average increase projected this quarter for the next twelve months. 

Capital spending appears to be on the rise, too, with almost three-quarters (73%) of the surveyed CFOs expecting an increase at their company over the next twelve months.  The average forecast is an increase of 8.1%, up from last quarter’s projected 6.6%. 
Hiring is expect to grow by 4.0%, the same as forecast last quarter. 

While three-quarters of the CFOs say they are concerned about inflation, two-thirds (69%) of the surveyed group think the Federal Reserve should hold steady on interest rates.  A quarter (26%) are in favor of a one-quarter percentage point increase. 

The CFOs’ optimism about economic and company-specific growth dipped this quarter, though, with economic optimism falling back to 68.64 out of 100 from 71.06 and company-specific optimism falling to 76.27 from 78.12.  

“Our survey results don’t point to stagflation, a concern today among investors and economists,” noted John Elliott, Dean of Baruch College’s Zicklin School of Business.  “Instead, CFOs are forecasting measured growth in capital spending and price increases.  Yet, they don’t favor further increases in interest rates at this time.”    

Dean Elliott reported that smaller companies appear to be the stronger drivers of economic growth.  (See table below.)  “Smaller companies expect to grow more rapidly, invest more aggressively and have more control over their product prices,” he said.  

Table Comparing Weighted vs. Unweighted Forecasts for Next 12 Months

Capital spending

8.1% (weighted by revenue)

9.3% (unweighted)

Prices of products

3.3% (weighted by revenue)

3.7% (unweighted)


4.0% (weighted by revenue)

5.6% (unweighted)

Enron Verdicts Win Support
Survey respondents showed nearly full agreement with this quarter’s Enron verdicts, with only 3% disagreeing with the guilty rulings against Kenneth Lay and 2% disagreeing with them against Jeffrey Skilling.   While few argued for maximum sentencing, the median sentenced proposed by the CFOs for Lay was 20 years and Skilling, 25 years.   

Colleen Cunningham, President and CEO of FEI, noted that respondents’ comments expressed the belief that ignorance is no defense for a CEO or a CFO.  She added that “CFOs are committed to demonstrating that Enron was the exception, not the rule.”  

Lasting Legacy of Sarbanes-Oxley
This quarter’s survey followed up on the impact of more extensive reporting requirements under Sarbanes-Oxley.  Among the respondents from public companies, 89% said their auditors were spending more time and care on their reviews.  Corporate finance divisions at public companies have also grown significantly since the 2002 Act.  Staffs have increased at more than two-thirds of the public companies surveyed (68%), compared to 15% at private companies.

About the Survey
Full survey results will be available June 26 at  For the full results prior to that, please contact

This quarter, the CFO Outlook Survey, conducted by Financial Executives International and Baruch College’s Zicklin School of Business, interviewed 207 corporate CFOs electronically the week of June 5.  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.  

Revenue-weighted averages are provided for projected changes in capital spending and for projected price increases.   An employee-weighted average is provided for the projected change in hiring.

FEI 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, founded in 1847, is a senior college of the City University of New York. The Zicklin School of Business at Baruch College is the largest collegiate school of business in the nation, producing graduates who assume leadership positions in all areas of American business as well as conduct important academic research.  Baruch has one of the largest accounting programs in the country whose graduates become practicing CPAs.



Andrew Healy
Chris Allen

John Elliott
Baruch College