Signing Bonus, Managerial Ability, and Corporate Performance

43 Pages Posted: 15 Aug 2015

See all articles by Margaret Rui Zhu

Margaret Rui Zhu

The Chinese University of Hong Kong (CUHK)

Xiaoxiao He

City University of Hong Kong (CityU)

Date Written: August 13, 2015

Abstract

This paper uses hand-collected data to study CEO's cash signing bonus among listed U.S. firms. Empirical findings suggest that issuing cash signing bonus is not motivated by free cash flow problem or by a higher termination risk of the new position . Instead, CEOs who receive cash signing bonus are less likely to be over-compensated, supporting the Ex Post Settlement mechanism. Moreover, our results suggests that company uses cash signing bonus to attract talent CEO who enhances subsequent corporate performance.

Keywords: Perquisites, Perks, Cash Signing Bonus, Managerial Ability, Executive Compensation

JEL Classification: G30, J33

Suggested Citation

Zhu, Margaret Rui and He, Xiaoxiao, Signing Bonus, Managerial Ability, and Corporate Performance (August 13, 2015). 28th Australasian Finance and Banking Conference, Available at SSRN: https://ssrn.com/abstract=2644772 or http://dx.doi.org/10.2139/ssrn.2644772

Margaret Rui Zhu

The Chinese University of Hong Kong (CUHK) ( email )

Shatin, N.T.
Hong Kong
Hong Kong
+852 3943 3216 (Phone)

Xiaoxiao He (Contact Author)

City University of Hong Kong (CityU) ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

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