Abstract We study labor unions, an important stakeholder group that has not been a focus of the earnings smoothing literature. We posit that managers strike a balance between sheltering resources from employees’ profit sharing demands and catering to employees’ aversion to downside risk by smoothing earnings. We then hypothesize that a strong labor union would intensify managerial incentives to smooth earnings. Consistent with our hypothesis, we find that union strength is positively associated with earnings smoothing activities through management of both accruals and R&D expenditures.

Abstract Contracting between tax entities and tax professionals occurs millions of times every year, yet little is known about the nature of these economic interactions. This study examines the effect of commonly occurring contextual factors on tax professionals’ billing decisions for tax research. These contextual factors are unrelated to the tax research itself and the time it takes to conduct the tax research, but we find that billing decisions are strongly influenced by the three non‐time‐related contextual factors that we manipulate. Initial client volume impacts amounts billed for tax research, with lower initial client volume resulting in higher per client fees. Further, we find that initial billing decisions serve as value billing benchmarks for unanticipated subsequent clients who benefit from research conducted for initial clients. As a result, subsequent clients are billed higher fees when they follow a smaller number of initial clients. We also find that client referrals are billed higher fees than nonclient referrals because professionals attempt to avoid making initial clients feel as though they have been treated unfairly relative to subsequent clients who would otherwise be billed lower fees. The results of this study are relevant beyond the traditional confines of accounting research—they are relevant to the millions of tax entities that contract with tax professionals each year.

Abstract This study examines whether acquirers make better acquisition decisions when target firms’ financial statements exhibit greater comparability with industry peer firms. We predict and find that acquirers make more profitable acquisition decisions when target firms’ financial statements are more comparable—as evidenced by higher merger announcement returns, higher acquisition synergies, and better future operating performance. We also find that post‐acquisition goodwill impairments and post‐acquisition divestitures are less likely when target firms’ financial statements are more comparable. Finally, we find that acquirers benefit most from comparability when acquirers’ ex ante information asymmetry is higher, acquirers operate in volatile operating environments, and management knows relatively less about the target. In total, our evidence suggests targets’ financial statement comparability helps acquirers make better acquisition‐investment decisions and fosters more efficient capital allocation.