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CFO Survey


Bernanke Gets High Grades on 1st Anniversary

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FLORHAM PARK, N.J. and NEW YORK, December 19, 2006 – Contrary to the Federal Reserve Board’s indication that inflation looms as a bigger threat to the economy than recession, American CFOs are more concerned about recession in 2007. 

According to the 2006 fourth quarter “CFO Outlook Survey,” conducted by Financial Executives International (FEI) and Baruch College’s Zicklin School of Business, 30% of the participating CFOs indicated they were quite to very concerned about recession, compared to 16% who are quite to very concerned about inflation.  Including those CFOs who indicated “moderate” concern, 59% worry about recession compared to 53% who worry about inflation.

“CFOs are concerned about both inflation and recession but on balance today see recession as the larger threat,” said John Elliott, Dean of the Zicklin School of Business at Baruch College.  “The tension between these views suggests the current Fed attitude of wait and see may be about right.”

In the survey, CFOs gave high marks to Federal Reserve Chairman Ben Bernanke as he approached his first anniversary in office.  Half ranked his overall performance as very good to excellent.  He got the best marks for “controlling inflation,” where 54% rank his performance as very good or excellent.  He scored lowest in the area of “creating economic growth.”

Concerns Not Enough to Eclipse Optimism or Stop Spending
Overall CFOs maintain a largely positive view about the economy and their companies’ prospects.  The CFO economic optimism index for the U.S. economy increased modestly to 69.2 in the fourth quarter from 67.6 in the third quarter.  Company-specific optimism was virtually flat at 75.6. 

Capital spending over the next 12 months is expected to increase by a weighted average of 7.3%, down from the 8.0% increase forecast last quarter.  However, companies plan to spend more on technology over the next year: CFOs forecast an 8.4% increase in technology spending, as compared with 6.9% in the prior quarter.  New hiring is expected to increase about 4% over the next 12 months, virtually the same as forecast in prior quarters this year.

Health care costs appear to be continuing their relentless rise, with CFOs planning to pay 9.2% more for health care next year.  There has never been a quarter when CFOs expected health care costs to decrease.

Leave Executive Pay Alone – and Other Thoughts for the New Congress
Asked to set priorities for the new Congress, CFOs ranked the war in Iraq and terrorism/homeland security as numbers one and two, respectively. Tax reform ranked a close third on their list.  CFOs do not favor Congressional intervention on the pay front.  Minimum wage and executive compensation had the lowest priority rankings. 

Sixty-six percent of the public company CFOs participating in the survey oppose proposed legislation that would require shareholder approval of executive pay, but one-third of public-company respondents either support the legislation or would under certain circumstances. 

Eighty-three percent of the participating CFOs think it’s very to extremely important for SEC and PCAOB guidance to help make section 404 of Sarbanes-Oxley more cost efficient and effective.  “Our membership has long been clear that the expensive burden of compliance with Section 404 threatened to undermine the act’s good intentions,” said Colleen Cunningham, President and CEO of FEI.  “The dialogue between business and the SEC in this area has been constructive.”

Corporate Blogs
Though blogs have carved a niche in pop culture, corporate America has not yet fully embraced this new and pervasive form of communication.  Even though the number of current Internet blogs is estimated at 50-80 million, only 4% of those surveyed said their companies had a blog that was officially sanctioned and written by an executive or other employee.  Just 15% said their companies monitored blogs for mentions of their brand.

About the Survey
Full survey results are available at or from Andrew Healy at

This quarter, the CFO Outlook Survey, conducted by Financial Executives International and Baruch College’s Zicklin School of Business, interviewed 279 corporate CFOs electronically the week of December 4.  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 and technology spending.   An employee-weighted average is provided for the projected changes in health care costs and 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 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.


Andrew Healy
Chris Allen

John Elliott
Baruch College