DEBT, FIRM SIZE, AND ACCOUNTING QUALITY: EMPIRICAL EVIDENCE FROM TURKEY

Abstract

This study aims to investigate how firm size moderates the relationship between debt and accounting quality of the non-financial firms listed on Borsa Istanbul (BIST) in Turkey. The financial data are downloaded from Orbis including the years from 2010 to 2018. Ordinary least squares regression has been applied. This study contributes to the literature by investigating how firm size shapes the impact of leverage on accounting quality. The results of this study show that the effect of leverage on accounting quality is changing depending on the firm size. Accordingly, this study concludes that the magnitude and the direction of the effect of leverage on accounting quality become stronger when the firm size gets smaller.