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Golden hellos: Signing bonuses for new top executives

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  • Xu, Jin
  • Yang, Jun

Abstract

We examine signing bonuses awarded to executives hired for or promoted to named executive officer (NEO) positions at Standard & Poor's 1500 companies during the period 1992–2011. Executive signing bonuses are sizable and increasing in use, and they 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.

Suggested Citation

  • Xu, Jin & Yang, Jun, 2016. "Golden hellos: Signing bonuses for new top executives," Journal of Financial Economics, Elsevier, vol. 122(1), pages 175-195.
    • Handle: RePEc:eee:jfinec:v:122:y:2016:i:1:p:175-195
    DOI: 10.1016/j.jfineco.2015.11.003
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    Cited by:

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    2. Daniel Beck & Gunther Friedl & Peter Schäfer, 2020. "Executive compensation in Germany," Journal of Business Economics, Springer, vol. 90(5), pages 787-824, June.
    3. He, Xiaoxiao & Zhu, Margaret Rui, 2020. "Are interim CEOs just caretakers?," Journal of Corporate Finance, Elsevier, vol. 61(C).
    4. Jiyoon Lee, 2023. "CEO prior uncertainty and pay–performance sensitivity," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 46(4), pages 1021-1045, December.
    5. Gillan, Stuart L. & Nguyen, Nga Q., 2016. "Incentives, termination payments, and CEO contracting," Journal of Corporate Finance, Elsevier, vol. 41(C), pages 445-465.
    6. Marshall, Ben R. & Nguyen, Justin Hung & Nguyen, Nhut H. & Visaltanachoti, Nuttawat, 2021. "Does a change in the information environment affect labor adjustment costs?," International Review of Financial Analysis, Elsevier, vol. 74(C).
    7. Julia Darby & Graeme Roy & Stuart McIntyre, "undated". "The sticking plasters aren’t working: the ongoing UK workforce crisis in adult social care, new evidence from an expansive database of job advertisements," Working Papers 2301, University of Strathclyde Business School, Department of Economics, revised Feb 2023.

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    More about this item

    Keywords

    Executive compensation; Signing bonus; Termination risk; Incentive device;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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