CEO performance‐based grants’ vesting provisions and debt contracts: Evidence from GAAP, Non‐GAAP and KPI metrics
研究了CEO基于GAAP、非GAAP和KPI指标的股权与现金授予归属条款对债务合同的影响，发现GAAP和KPI指标降低债务成本，而非GAAP指标则相反。
Abstract We examine the influence of CEOs’ equity and cash grants’ vesting provisions that are based on (i) accounting performance metrics prepared under US generally accepted principles (GAAP), (ii) non‐GAAP performance metrics and (iii) key performance indicators (KPIs) on debt contracts. We find that grants with vesting provisions based on GAAP metrics and KPIs lead to a lower cost of debt, a lower likelihood of collateral requirements and less restrictive covenant terms. In contrast, performance‐based grants with non‐GAAP vesting provisions lead to a higher cost of debt, a higher likelihood of collateral requirements and more restrictive covenant terms. Supplementary analyses reveal that our results are incremental to other debtholder‐friendly features in the CEO contracts, such as grants with debt‐related performance measures and CEOs’ inside debt holdings, and robust to alternative variable definitions and specifications. Overall, our results suggest that debtholders understand the differing incentives associated with GAAP, non‐GAAP and KPI‐based performance measures, and incorporate these differences into debt contracts.