Sean Woo, FEI

Chris Allen, FEI

Cabell Smith, Fuqua School of Business

Note to editors:
Complete survey results are available on the Internet..


April 23, 1997, DURHAM, N.C. - CFOs see further increase in interest rates in 1997, according to the most recent Financial Executives Institute/Duke Fuqua School of Business Corporate Business Outlook Survey

Chief financial officers responding to the survey say there's a 60 percent chance of a hike in short-term interest rates by the end of June. The CFOs put the likelihood of an interest rate increase during the next four quarters at 76 percent.

"The interest rate results tell only half the story," said Duke Professor Campbell Harvey, co-director of the FEI-Duke survey. "We also ask financial executives about capital investment plans, research and development expenditures, merger and acquisition activity, and employment -- all of which are sensitive to changes in interest rates. While there is some weakening in some of the survey's indices, CFOs are saying they expect a strong showing in 1997."

For each index, a value of 100 means that 100 percent of the respondents believe that investment will increase and a value of -100 means that 100 percent of the respondents believe that investments will decrease.

The survey was conducted between April 7 and 10, well after the Federal Reserve's most recent action on short-term rates and after the long-term Tresury bond yield had gone beyond 7 percent.

Additional findings:

"While the impact of higher interest rates will vary from company to company," said FEI Chairman Frank J. Borelli, CFO and senior vice president of Marsh & McLennan Companies, "overall the results of our survey bode well for business's ability to absorb higher interest rates."

The questionnaire was faxed to 2,500 chief financial officers who are members of FEI from a cross-section of U.S. businesses. The survey is conducted at the beginning of each quarter.

Financial Executive Institute is the leading advocate for the views of corporate financial management. Its 14,000 members hold policy-making positions as chief financial officers, treasurers and controllers at 8,000 companies throughout the United States and Canada.

The Fuqua School of Business at Duke University was founded in 1970. Fuqua's mission is to provide the highest quality education for business and academic leaders and to promote the advancement of the understanding and practice of management through research.