We investigate the interplay between creditor financing and the smoothness of earnings reported by European private firms and document how heterogeneous debt-contracting infrastructures across Europe moderate this relation. Most European private firms are owner-manager run enterprises with...

We investigate how managers smooth volatility in balance sheets, using the pension accounting change IAS 19R as a shock to balance sheet volatility. This shock increases pension plans’ funding transparency, which is the source of volatility, without targeting actual plan funding. We find that...