- 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 -
FLORHAM PARK, N.J. and NEW YORK, Jan. 30 /PRNewswire/ -- 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 http://www.cfosurveys.com or from Jamie
Renninger at jamie.renninger@fd.com.
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 http://www.financialexecutives.org.
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. http://www.baruch.cuny.edu
SOURCE Financial Executives International
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Related links:
http://www.financialexecutives.org
http://www.baruch.cuny.edu http://www.cfosurveys.com
CONTACT:
Jamie Renninger of FD, +1-212-850-5658, or
jamie.renninger@fd.com, for Financial Executives International
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