We show that firm liability structure and associated cash flows matter for firm behavior and that financial market participants price stocks accordingly. Stock price reactions to monetary policy announcements depend on the type and maturity of debt issued by the firms and the forward guidance provided by the Fed, both at and away from the zero lower bound. Further, the marginal stock market participant knows the current liability structures of firms and does not rely on rules of thumb. The cash flow exposure at the time of monetary policy actions predicts future investment, assets, and net worth, clearly violating the Modigliani-Miller theorem.AN INFLUENTIAL BRANCH OF THE MACROFINANCE literature focuses on financial conditions to amend standard macroeconomic models to better fit the observed effects of monetary policy on real activity and helps explain why financial markets are so important and financial crises so destructive. These models, in which the Modigliani-Miller theorem fails, collectively require cash in the firm to be more valuable than cash outside it. While the financial accelerator models are compelling, the literature remains thin on empirical evidence due to the difficulty of establishing identified effects. Similarly, our understanding of the effects of monetary policy on stock prices is also