U.S. corporate executives say that they expect shareholder pressure on companies to adopt shareholder-friendly strategies will increase in 2006.

Almost two-thirds (64%) of executives polled at Standard & Poor’s Ratings Services Corporate Credit Conference said they expect shareholders to be more vocal in 2006.

“Shareholder pressure on companies to recapitalize, increase dividends, buy back shares, or engage in mergers and acquisitions has become more common in 2005,” said Standard & Poor’s managing director Nicholas Riccio. “Clearly, most of those polled expect this trend to intensify next year, which may put additional pressure on credit quality.”

“While credit quality has been moderating over the past two years, 2006 is likely to be a somewhat more challenging year for corporate credit quality than 2005,” said Riccio. “Although many corporate sectors are doing well at this point, financial strategy and operating execution will be even more critical.”

Responses to the opinion poll from 131 buy-side, sell-side, and corporate executives identified several key economic and business challenges shaping the financial strategies for corporate America in 2006 and beyond. Fifty-four per cent of respondents said that high energy and commodity costs will be the greatest economic challenge facing the U.S. in 2006, followed by rising interest rates (19%) and consumer confidence (17%).

Almost half (43%) of poll respondents said that over the next three to five years, pension and health care costs will be the greatest economic challenge, followed by the federal deficit (25%) and high energy and commodity costs (18%). Balance of payments (7%) and terrorism (6%) were not considered major issues.

When asked about the Sarbanes-Oxley Act, 65% of respondents said they favoured maintaining it but easing some of its provisions. Just over a quarter of those polled (26%) said they believe the act is worthwhile despite the costs, and only 8% said they believe it should be abandoned.

On the issue of interest rates, there was no clear consensus on the level at which the Fed will stop raising rates. More than one-third of respondents (37%) said the Fed would stop raising interest rates at 4.75%, 35% said 5%, 22% said 4.50%, and only 1% said 4.25%