Smoothness and the Value Relevance of Taxable Income
研究发现应税收入的平滑性会降低其价值相关性，且这种降低源于管理层的自由裁量平滑行为，该行为还与未来更高的避税水平相关。
ABSTRACT This study investigates whether the smoothness of estimated taxable income influences its value relevance. Contrary to research that finds that smoothness enhances the value relevance of book income, we find that smoothness reduces the value relevance of taxable income. We decompose the smoothness of taxable income into its innate and discretionary components and find that innate smoothness is not associated with the value relevance of taxable income. However, we find that discretionary smoothness is associated with a reduction in taxable income's value relevance, suggesting that discretionary smoothness either eliminates or reduces the information contained in taxable income. In additional analysis, we find that discretionary smoothness is also associated with higher levels of future tax avoidance, consistent with managers smoothing taxable income as part of their tax avoidance strategy. In combination, our results suggest that the reduced value relevance of estimated taxable income is a byproduct of managers' tax-planning strategy. JEL Classifications: G32; H25; H32; M41.