Think you’re having a bad day? Consider the CEOs and CFOs of the nation’s biggest banks that have been caught up in the robo-signing scandal. They may be personally liable for staggering sums if judges agree that they violated Sarbanes-Oxley and a few other federal regulations by allowing the robo-signing to take place. Their shareholders could be hurt badly, too.

Robo-signing, that funny-at-first moniker, refers to the back-office mess and legal woes created when employees in the mortgage servicing departments signed heaps of foreclosure affidavits without actually checking the information. According to American Banker, a trade newspaper, the three largest loan servicers could be saddled with $13 billion in so-called repurchase losses. One analyst mentioned a range of $55 billion to $120 billion in repurchase losses. At this stage, the exposures are hard to define. But if things go badly for these banks, the repurchase losses will be small compared to the economic punch they could take if buyers of subprime mortgage securities prevail in court. more

Deal-making companies actually are doing better than their go-it-alone counterparts, according to an analysis by consulting firm Towers Watson and researchers at the Cass Business School in the UK. The Quarterly Deal Performance Monitor looks at 160-some deals completed in the third quarter of 2010. The result? Companies involved in M&A beat the MSCI World Index by 4.3 percentage points this quarter; in the second quarter of 2010, acquiring companies topped the Index by 3.1 percentage points. The MSCI World Index measures equity market performance of 20-some developed markets, including Australia, Germany, Japan, and the United States.

The results fly in the face of conventional wisdom, which for years has held that most deals destroy, rather than create value. Consider this 1995 study by BusinessWeek and Mercer Management Consulting Inc., which examined 150 deals of $500 million or more. About half had destroyed shareholder wealth, the researchers concluded. more

For the past couple of years, I’ve been asserting that most larger companies (those with 1,000 or more employees) need to adopt a new approach to using software to handle their taxes comprehensively, both the direct sort (income taxes) and the indirect variety (sales and use as well as value-added/goods and service taxes). It’s an emerging enterprise challenge driven by more competent and determined tax enforcement by governments worldwide. It will require corporations to make changes in how they employ software to manage their taxes, structure their tax-related data, and manage their tax processes. Increasingly, corporations will need to be able to have better control over tax data management, tax calculation, and associated tax processes buttoned down to be able to optimize their tax liabilities while minimizing their tax risk exposure.

There are a couple of important game changers at work that fundamentally alter the way larger companies need to manage their taxes. One is a more effective use of technology by governments to collect taxes; the other is increased cooperation between taxing authorities to share information. In the United States, the Internal Revenue Service (IRS) has long shared its tax return data with individual states, and now the number of international bilateral information sharing agreements is growing, which will have a profound impact on how companies manage transfer pricing. If you don’t think this is a seismic shift, think again. A generation ago, Swiss bank secrecy was inviolate. Today, tax authorities in the United States, United Kingdom, and (soon) Germany will be getting reports from Swiss banks about their respective citizens’ accounts.

Today, few companies are prepared to deal with a more challenging tax enforcement environment. Unless they deal with it strategically, they are likely to pay more taxes and incur greater fines than necessary. Corporations must step back and rethink how they manage taxes. They must address their information, technology, and process shortcomings to achieve the lowest possible tax expense and manage their tax-related risks more effectively.

If you want to read more about my views on this topic, please check out a longer, more comprehensive research note on this topic at our Web site. ###