CFO writer David Katz offers an opinion piece on what he sees as the top corporate finance trends likely to play out in 2013. At the top of the list, Katz cites pressure on CFOs to unlock corporate cash hordes.
One night last week, at a minute after midnight, I noticed that I had received an e-mail a few hours earlier from my ever-challenging boss, Richard Rivera, the chief content and development officer here. Rich’s e-mailed questions are often provocative, but this was more provocative than others. “David, what are the trends in 2013 that will define corporate finance?” he asked. “We should identify and report on what they are.”
Indeed. Any decent editor must carry around in his or her brain a constantly updating ranking of the topics readers most want to know about at any given moment. We make our decisions about what stories to assign and give the most prominence to in that context.
But spelling them out in print for an entire year is another matter. Although we editors have metrics about what most attracts our audiences and keeps them engaged kicking around in our head, instincts must play a decisive role in deciding what’s most important to you, dear reader. And instincts can be a faulty means of forecasting.
- The pressure on CFOs to unlock corporate cash hordes will grow. With the fall of Lehman Brothers set to reach its fifth anniversary this fall, worries about liquidity are now same-old, same-old. Consumer spending is starting to rise, and shareholders will begin demanding greater return on their equity via corporate growth. In essence, that means they will press companies to put their capital into areas that can sustain a greater return on their shares, such as investments in plant and equipment, research and development, and hiring (see trend number 2 below). Yet post-financial-crisis caution continues to affect CFO attitudes toward growth, and early indications are that companies are continuing to squirrel away liquid cash. If that attitude persists through 2013, we’ll see companies continue to try to satisfy shareholders in the most cash-cautious ways: by boosting dividends and buying back their own shares. And don’t expect much in the way of spending on corporate acquisitions, at least through the end of this quarter. After that, the amount of M&A activity depends on the performance of the U.S. economy.
Read the CFO opinion piece in its entirety.