@article{article_1597346, title={DOES THE RELATIONSHIP BETWEEN LEVERAGE AND ACCOUNTING DISCRETION DIFFER ACROSS LEVERAGE LEVELS? THE CASE OF EXTREME INDEBTEDNESS}, journal={Journal of Research in Business}, volume={10}, pages={426–443}, year={2025}, DOI={10.54452/jrb.1597346}, author={Büyükkurt, Ömer Faruk}, keywords={accounting discretion, accrual accounting, leverage}, abstract={This study investigates whether the relationship between leverage and discretionary accruals is uniform across firms. The sample consists of all manufacturing firms listed on Borsa Istanbul (BIST) during the 2013–2021 period, comprising 1,653 firm-year observations. The methodology employed is a panel data fixed-effects regression model. The findings reveal that leverage levels have a positive and significant relationship with discretionary accruals. However, contrary to the rest of the sample, the relationship between leverage and discretionary accruals is significantly negative for highly leveraged firms. The study’s main findings are further supported by t-tests comparing the means of discretionary accruals across sub-samples. The results confirm that the discretionary accruals of highly leveraged firms differ significantly from the rest of the sample. Overall, the findings demonstrate that the relationship between leverage and discretionary accruals is not uniform within the same sample; rather, discretionary accruals vary depending on leverage levels. Consequently, any analysis of discretionary accruals conducted without accounting for different levels of leverage may carry the risk of producing misleading results.}, number={2}, publisher={Marmara University}