We examine whether restricting managers’ discretion through GAAP impacts the usefulness of accounting information in debt contracting. We find that under more restrictive standards, lenders make more non-GAAP modifications to GAAP-based performance measures, suggesting that restrictions of manager’s discretion reduce the usefulness of accounting information. We perform two additional analyses to enhance identification. First, we examine the relation between the exclusion of specific non-recurring items from contractual definitions of earnings and the number of restrictions in the GAAP standards that apply to each specific item. Second, in difference-in-differences analyses around standard changes, we examine whether the propensity to exclude items varies with changes in restrictions of the related standards. We find consistent evidence in both of these analyses. Moreover, we find that restrictive standards are also positively associated with loan spreads but significantly less so when lenders adjust GAAP numbers in loan contracts. Overall, by focusing on lenders as important users of financial statements, this study improves our understanding of the impact of GAAP restrictions on the usefulness of accounting information.