Golden Hellos: Signing Bonuses for New Top Executives

55 Pages Posted: 2 Sep 2013 Last revised: 10 Dec 2015

Jin Xu

Virginia Tech - Pamplin College of Business

Jun Yang

Indiana University - Kelley School of Business - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: December 9, 2015

Abstract

We examine signing bonuses awarded to executives hired for or promoted to Named Executive Officer (NEO) positions at S&P 1500 companies during the period of 1992–2011. Executive signing bonuses are sizeable and increasing in use, and are labeled by the media as “golden hellos.” We find that executive signing bonuses are mainly awarded at firms with greater information asymmetry and higher innate risks, especially to younger executives, to mitigate the executives’ concerns about termination risk. When termination concerns are strong, signing bonus awards are associated with better performance and retention outcomes.

Keywords: Executive compensation; Signing bonus; Termination risk; Incentive device

JEL Classification: J33, M52

Suggested Citation

Xu, Jin and Yang, Jun, Golden Hellos: Signing Bonuses for New Top Executives (December 9, 2015). Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=2319204 or http://dx.doi.org/10.2139/ssrn.2319204

Jin Xu (Contact Author)

Virginia Tech - Pamplin College of Business ( email )

Department of Finance
880 West Campus Dr
Blacksburg, VA 24061
United States

HOME PAGE: http://www.finance.pamplin.vt.edu/faculty/jx/index.html

Jun Yang

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3395 (Phone)
812-855-5875 (Fax)

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