We find that firms that grant performance-contingent (p-c) equity awards with accounting-based vesting conditions to their CEOs have lower cost of debt and less restrictive loan terms. The benefits of p-c accounting awards on debt financing are greater when the moral hazard problem faced by...

This study examines contingencies written in firms’ material product market contracts, focusing on i) exogenous uncertainty as an ex-ante determinant, and ii) operating efficiency and market beta as ex-post consequences. We extract material contracts from firms’ public regulatory filings and...