This paper shows that creditors' horizon interests impact the design of CEO compensation contracts. Using a regression discontinuity design, we find that borrowing firms provide shorter incentives to their CEO following a loan covenant violation. They do so by decreasing the horizon of pay and tilting the choice of performance metrics toward accounting goals, in particular short‐term ones. This effect is stronger when creditors' interests are more immediate, such as among loans with short remaining maturity and when borrowers have lower cash reserves. This effect is weaker when the cost to shareholders is higher, such as among firms with high growth opportunities. Together these results are consistent with boards intending to facilitate renegotiation and mitigate repayment risk while balancing shareholder interests. Overall, our evidence supports a novel reason for the use of short‐term incentives, namely to reduce the agency cost of debt.

We provide a method to track the active prevalence of COVID-19 in real time, correcting for time-varying sample selection in symptom-based testing data and incomplete tracking of recovered cases and fatalities. Our method only requires publicly available data on positive testing rates in combination with one parameter, which we estimate based on a representative randomized sample of nearly 10,000 individuals tested in Utah in May and June 2020. We validate our method using external studies in Indiana in April 2020 and two counties in Utah in March 2021. In all three locations and times, our estimates of latent prevalence are within the 95 percent confidence intervals of prevalence estimates from randomized testing. Applying our method to all 50 states, we show that true prevalence is 2–3 times higher than publicly reported.