About

Michael Faulkender is the William A. Longbrake Professor of Finance at the Robert H. Smith School of Business. He joined the University of Maryland in 2008 and has served as the Associate Dean of Master’s Programs. Faulkender has held significant roles in the U.S. Department of the Treasury, including serving as the Assistant Secretary for Economic Policy in 2019, and was confirmed as the 16th Deputy Secretary of the Treasury in March 2025. He was also appointed acting commissioner of the Internal Revenue Service in April 2025. His work in government involved advising on domestic and international economic issues, negotiating the CARES Act during the COVID-19 pandemic, and leading the implementation of the Paycheck Protection Program (PPP). He was awarded the Alexander Hamilton Award for Distinguished Leadership, the highest service award at the Department of the Treasury. His research intersects financial economics and public policy, focusing on topics such as the job impacts of the PPP, corporate capital structure, risk management, corporate liquidity, and executive compensation. Faulkender's scholarly work has been published in top academic finance journals, received numerous awards, and has been cited in major media outlets including the Wall Street Journal, Washington Post, and The New York Times. He has taught classes in the MBA and EMBA programs at the Smith School. Faulkender holds a PhD in Finance from Northwestern University and a Bachelor's Degree in Managerial Economics from UC Davis. He has also served as a faculty member at prestigious institutions including the Wharton School at the University of Pennsylvania, the Kellogg School at Northwestern University, and the Olin School at Washington University in St. Louis.

Research topics

• Business
• Economics
• Labour economics

Selected publications

• The Job Preservation Effects of Paycheck Protection Program Loans

  SSRN Electronic Journal · 2020 · 68 citations

  1st authorCorresponding
  • Business
  • Labour economics
  • Economics
  PublisherDOI

• Understanding the Rise in Corporate Cash: Precautionary Savings or Foreign Taxes

  Review of Financial Studies · 2019-01-14 · 166 citations

  article1st author

  Abstract What has driven the dramatic rise in U.S. corporate cash? Using non-public data, we show that the run-up is not uniform across firms but is concentrated in the foreign subsidiaries of multinational firms. Standard precautionary motives explain only domestic cash holdings, not these burgeoning foreign cash balances. Falling foreign tax rates, coupled with relaxed restrictions on income shifting, are the root of the changing foreign cash patterns. Firms with intellectual property have the greatest ability to shift income to low tax jurisdictions, and their foreign subsidiaries are where we observe the largest accumulations of cash. Received September 6, 2017; editorial decision August 22, 2018 by Editor David Denis. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

  PublisherDOI

• Understanding the Rise in Corporate Cash: Precautionary Savings or Foreign Taxes

  National Bureau of Economic Research · 2017-09-01 · 11 citations

  reportOpen access1st authorCorresponding

  What has driven the dramatic rise in U.S. corporate cash? Using non-public data, we show that the run-up is not uniform across firms but is concentrated in the foreign subsidiaries of multinational firms. Standard precautionary motives explain only domestic cash holdings, not these burgeoning foreign cash balances. Falling foreign tax rates, coupled with relaxed restrictions on income shifting, are the root of the changing foreign cash patterns. Firms with intellectual property have the greatest ability to shift income to low tax jurisdictions, and their foreign subsidiaries are where we observe the largest accumulations of cash.

  PublisherDOI

• Taxes and leverage at multinational corporations

  Journal of Financial Economics · 2016-05-30 · 99 citations

  article1st author
  PublisherDOI

• Understanding Precautionary Cash at Home and Abroad

  UKnowledge (University of Kentucky) · 2015-12-01 · 17 citations

  preprint1st authorCorresponding

  In the presence of market frictions, it is optimal for firms to stockpile cash to fund investment projects which may arise in the future. Prior work has documented that firms’ precautionary savings motives predict variation in the size of firms’ cash stockpiles. The dramatic run-up in cash stockpiles raises the question of why these precautionary motives have increased. In the presence of repatriation taxes, foreign and domestic cash are imperfect substitutes. We show that although precautionary motives explain variation in the level of cash held domestically, they provide little explanatory power for the level of foreign cash. Multinational firms’ foreign cash balances are instead explained by low foreign tax rates and the ability to transfer profits within the firm through related-party sales. The firms with the greatest incentive and ability to transfer income to low-tax jurisdictions do so, and this results in stockpiles of cash trapped in their foreign subsidiaries.

  Publisher

• Debt and Taxes at Multinational Corporations

  SSRN Electronic Journal · 2013-01-01 · 7 citations

  articleOpen access1st authorCorresponding
  PublisherDOI

• Is Disclosure an Effective Cleansing Mechanism? The Dynamics of Compensation Peer Benchmarking

  Review of Financial Studies · 2012-11-20 · 132 citations

  article1st authorCorresponding

  Firms routinely justify CEO compensation by benchmarking against companies with highly paid CEOs. We examine whether the 2006 regulatory requirement of disclosing compensation peers mitigated firms' opportunistic peer selection activities. We find that strategic peer benchmarking did not disappear after enhanced disclosure. In fact, it intensified at firms with low institutional ownership, low director ownership, low CEO ownership, busy boards, large boards, and non-intensive monitoring boards, and at firms with shareholders complaining about compensation practices. The effect is also stronger at firms with new CEOs. These findings call into question whether disclosure regulation can remedy potential problems in compensation practices. The Author 2012. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.

  PublisherDOI

• Is Disclosure an Effective Cleansing Mechanism? The Dynamics of Compensation Peer Benchmarking

  SSRN Electronic Journal · 2012-01-01 · 42 citations

  articleOpen access1st authorCorresponding
  PublisherDOI

• Investment and Capital Constraints: Repatriations Under the American Jobs Creation Act

  Review of Financial Studies · 2012-09-22 · 232 citations

  article1st authorCorresponding

  The American Jobs Creation Act (AJCA) significantly lowered U.S. firms' tax cost when accessing their unrepatriated foreign earnings. Using this temporary shock to the cost of internal financing, we examine the role of capital constraints in firms' investment decisions. Controlling for the capacity to repatriate foreign earnings under the AJCA, we find that a majority of the funds repatriated by capital-constrained firms were allocated to approved domestic investment. Although unconstrained firms account for a majority of repatriated funds, no increase in investment resulted. Contrary to other examinations of the AJCA, we find little change in leverage and equity payouts. The Author 2012. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.

  PublisherDOI

• The Two Sides of Derivatives Usage: Hedging and Speculating with Interest Rate Swaps

  Journal of Financial and Quantitative Analysis · 2011-06-01 · 159 citations

  articleOpen accessSenior author

  Abstract Existing cross-sectional findings on nonfinancial firms’ use of derivatives that are usually interpreted as the result of hedging may alternatively be due to speculation. Panel data examinations can distinguish between derivatives practices that endure over time and are therefore more likely to result from hedging, and those that are more transient, thus more consistent with speculation. Our decomposition results indicate that hedging of interest rate risk is concentrated among high-investment firms, consistent with costly external finance. Simultaneously, firms appear to use interest rate swaps to manage earnings and to speculate when their executive compensation contracts are more performance sensitive.

  PublisherOA PDFDOI

Frequent coauthors

• Mitchell A. Petersen

  National Bureau of Economic Research

  63 shared

• Jun Yang

  Zhejiang Sci-Tech University

  5 shared

• Jason M. Smith

  Utah State University

  5 shared

• Kristine Watson Hankins

  4 shared

• Mark J. Flannery

  2 shared

• Rong Wang

  2 shared

• Todd T. Milbourn

  2 shared

• Nicole Thorne Jenkins

  University of Virginia

  2 shared

Labs

• Michael Faulkender LabPI

Awards & honors

• Alexander Hamilton Award for Distinguished Leadership (2020)