ABSTRACT: I examine whether firms alter their behavior in response to changes in accounting standards that mandate new financial statement disclosures. While prior research suggests that new recognition rules lead to changes in firm behavior, there is limited evidence that disclosure rules can impact firm behavior. This study helps to fill this void in the literature by examining the economic consequences of the mandated disclosures of pension asset composition required under SFAS 132R. Under pension accounting rules, the composition of pension assets is a key determinant of the assumed expected rate of return (ERR) on pension assets. I find that when firms disclose asset composition for the first time under SFAS 132R, firms that were previously using upward-biased ERRs respond by increasing asset allocation to high-risk securities and/or reducing the ERR assumption. While disclosure requirements arguably create less powerful incentives to alter firm decisions than recognition requirements, these findings offer evidence that firms alter behavior in response to disclosure standards. Data Availability: The data used in this study are publicly available from the sources indicated in the text.

ABSTRACT This study empirically examines whether deferred taxes provide incremental information about future tax payments and explores whether the relationship is affected by whether and when the deferred tax accounts reverse. The analysis provides evidence that while deferred taxes do provide incremental information about future tax payments, the magnitude of the information is small. Further, consistent with theoretical predictions (Guenther and Sansing 2000, 2004; Dotan 2003) the analysis demonstrates there is an asymmetrical association between deferred taxes and future tax payments. For instance, deferred taxes associated with temporary differences that are included in GAAP income prior to taxable income are associated with future tax payments. In contrast, deferred taxes associated with temporary differences that are included in GAAP income after taxable income are not associated with future tax payments. Finally, the analysis provides evidence that growth in the deferred tax balances does not defer future tax payments. Data Availability: The data are available from public sources.

ABSTRACT: This study investigates the circumstances under which “enhanced relationship” tax-compliance programs are mutually beneficial to taxpayers and tax authorities, as well as how these benefits are shared. We develop a model of taxpayer and tax authority behavior inside and outside of an enhanced relationship program. Our model suggests that, despite the adversarial nature of the relationship, an enhanced relationship program is mutually beneficial in many settings. The benefits are due to lower combined government audit and taxpayer compliance costs. These costs are lower because taxpayers are less likely to claim positions with weak support and the government is less likely to challenge positions with strong support inside the program. Further, we show that an increase in the ability of the tax authority to identify uncertain tax positions makes an enhanced relationship tax-compliance program more attractive to both the taxpayer and the tax authority. JEL Classifications: H26

ABSTRACT: This study provides both survey and experimental evidence to consider how social interactions between staff-level auditors and client management may affect staff auditors' perceptions and influence their decisions regarding the collection of audit evidence. During fieldwork, staff-level auditors have extensive interaction with client management. Survey evidence suggests that these staff-level auditors are often “mismatched” with client management, in terms of their experience, age, and accounting knowledge. Experimental results indicate that staff-level auditors may reduce the extent to which they collect evidence to avoid these interactions. Finally, the use of email communication with client management helped to mitigate the reduction in evidence collected caused by avoiding in-person interactions. Interestingly, when not collecting all the evidence, approximately half of the participants documented their findings in a vague or inappropriate manner, which would likely reduce the likelihood that reviewing auditors would identify a problem. Given the extent of audit evidence collected by young staff auditors, these findings have direct implications for workpaper and audit quality. Data Availability: Data and materials used in this study are available upon request.