Smoothing GAAP ETRs through Tax Accruals and the Quality of Financial Reporting

We thank Ryan J. Wilson (editor), two anonymous reviewers, Hye-Sun Chang, Travis Chow, Richard Crowley, Katharine Drake, Tatiana Fedyk, Brian Gale, Jeffrey Gramlich, Christina Lewellen, Theo Sougiannis, James Steckelberg, Xiaoli Tian, Brian Williams, and workshop participants at Fordham University, University of Illinois Urbana-Champaign, The Pennsylvania State University, Singapore Management University, Stanford Summer Camp, Washington State University, the 2015 American Accounting Association Annual Meeting, the 2016 Financial Accounting and Reporting Section Midyear Meeting, the 2016 American Taxation Association Midyear Meeting, the 2017 European Institute of Applied Science and Management Conference on Current Research in Taxation, and the 2018 Hawaii Accounting Research Conference for comments. The authors have no conflicts of interest to declare.

A previous version of this study was titled “Do Smoothing Activities Indicate Higher or Lower Financial Reporting Quality? Evidence from Effective Tax Rates.”

Paul Demeré, Bocconi University, Department of Accounting, Milan, Italy; Laura Yue Li, University of Illinois Urbana-Champaign, Gies College of Business, Department of Accountancy, Champaign, IL, USA; Petro Lisowsky, Boston University, Questrom School of Business, Department of Accounting, Boston, MA, USA and Norwegian Center for Taxation, Bergen, Norway; R. William Snyder, George Mason University, Costello College of Business, Department of Accounting, Fairfax, VA, USA.

Editor’s note: Accepted by Senior Editor Ryan J. Wilson.