Carry forward of tax losses aside, the result of applying tax effect accounting is to decrease the volatility in net profit that would be experienced because of the effect of timing differences on the amount of income tax expense recognized. Suggest that the motivation for managers in adopting tax effect accounting is to minimize this volatility. If this is correct, it explains why listed companies embraced tax effect accounting although there was no compulsion to do so until 31 December 1989. Ryan et al. reported that for reporting periods 1976-77, 1977-78 and 1978-75, more than 80 percent of the top 250 Aus
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