Check This post in Gamefaqs for a full discussion about it. Transcribing the important part here, Smirk does the following:
Normal attacks have a 95% chance of being a critical hit.
Gun attacks have a 70% chance of being a critical hit.
Attack power increases. Effect is equivalent to three uses of Tarukaja. However, does not stack with support effects.
This is the best neutral path guide I've found for SMT IV. It suggests that your choices in battle don't affect your alignment; they only affect the course of the battle/whether the boss gains or loses attack/defense power etc.
The only exception is where you get a moral choice, such as when you have the option to "execute" a boss at his request. This ...