Mixed Messages

Managers and shareholders are still struggling to determine who runs the show.

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If CFOs ever performed stand-up comedy, one could imagine a routine starting with something like, “Take my shareholders,…please!” Two decades of rhetoric have enshrined shareholders as the owners of the corporation. Their portfolio enhancement is the ultimate objective of corporate management. But as technology editor John Goff points out in our cover story, “Who’s the Boss?,” a strong majority of CFOs find the current spate of shareholder initiatives both distracting and counterproductive. In real life, as far as governance goes, managers and shareholders are still struggling to determine who runs the show.

A similar kind of mixed signal applies to economic issues. Fully 67 percent of CFOs express optimism about the future of the U.S. economy. But as evident last month in the Cash Management Scorecard, they aren’t optimistic enough to invest in it. This month’s Global Confidence Survey confirms that companies are holding back from new investments and projects. Why the high degree of caution?

Another finding from the survey suggests that the answer may lie in the nation’s current financial condition. Almost 90 percent of respondents said that balancing the federal budget is the most important issue in this election. In “It’s the Deficit,…”, deputy editor Ronald Fink reports that most economists, even conservative ones, believe that cutting taxes, which CFOs prefer, will only make the deficit worse. And then, how does one invest wisely in the face of anemic job growth, high oil prices, and an uncertain stock market?

But seriously, folks, with a recovery like this, who needs a recession?

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