Michael Faulkender

'Secret Sweetheart' Tax Deal Entangles McDonald's

The European Commission last week released details of its ongoing investigation of a Luxembourg-McDonald’s “sweetheart” tax deal and shined new light on “Europe’s new tax raid.” Regulators are focusing, in part, on Luxembourg as a tax haven. The deal gives a window to the complexity of interpreting and regulating cross-border tax rules and advance pricing arrangements, says Smith School finance professor Michael Faulkender. While responsibility lies with governments to manage these processes, Faulkender says McDonald’s and other companies are acting dutifully to their shareholders. Read more...

Treasury Targets Corporate Inversions, Drawing Ire of CEOs

Treasury continues to tighten its rules to prevent corporate "inversions" — the move in which a U.S. company merges with a smaller foreign company then shifts its official location abroad, to avoid U.S. taxes. Given the lack of congressional action on this issue, the new rule appears "reasonable," says the Smith School's Michael Faulkender. Still, he says, the U.S. tax system is "broken." Read more ...

High Corporate Taxes Incentivize Corporate Debt

Multinational American companies with significant operations in countries with low corporate taxes take on less debt than companies that face higher taxes, according to a new study from the Smith School. A link between higher corporate taxes and debt levels is predicted by economic theory, but some recent studies have failed to find such a connection. In this new study, however, the authors assume U.S. companies will keep their foreign profits abroad indefinitely. Read more ...

Mega-Merger Rekindles Debate Over Corporate Taxes

Two massive drug companies, New York-based Pfizer and Dublin-based Allergan (maker of Botox), are discussing a merger that could end up being the biggest in a year of blockbuster combinations. The merger also reignites debate over the corporate tax rate in the U.S., given that Pfizer's CEO has made it clear that a chief goal of the plan is to cut Pfizer's tax rate. Smith School finance professor Michael Faulkender shares insights. Read more...

Shaming Your Highly Paid CEO

Can U.S. companies be embarrassed out of paying their CEOs hundreds of times what the average worker makes? The SEC wants to find out. By a 3-2 vote, the agency recently ordered that companies begin disclosing the ratio of their CEO’s pay to that of the median employee. The rule’s backers believe it's indefensible that CEO pay has grown in the last-half century from 50 times what the average worker makes to roughly 300 times, even as middle-class wages have stagnated. Smith School professors Hui Liao and Michael Faulkender have differing viewpoints. Read more...

Dodd-Frank Is Turning Five: Did It Deliver?

The fifth anniversary of the landmark Dodd-Frank legislation, Congress's response to the financial crisis of 2007-08, arrives next month, prompting reflections on whether it has done what the Democratic-controlled Congress that passed it intended: Increase transparency and accountability in the banking system and — most importantly — reduce the likelihood of another crisis. Smith School professor Mike Faulkender gives the legislation mixed reviews and offers suggestions for reform. Read more...

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