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Does Manager Turnover Improve Firm Performance? New Evidence Using Information from Dutch Soccer, 1986-2004

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Author Info

  • ter Weel, Bas

    ()
    (CPB Netherlands Bureau for Economic Policy Analysis)

Abstract

This research examines the impact of manager turnover on firm performance using information from the Dutch soccer league in the period 1986-2004. The advantage of using sports data is that both manager characteristics and decisions and firm outcomes are directly observable. Both difference-in-difference and 2SLS estimates suggest no improvements in firm performance after manager turnover, whereas previous research based on publicly traded firm data has found positive but very small effects of manager turnover on firm performance. In addition, manager quality does not seem to matter in predicting turnover. These estimates are compared and contrasted with studies using publicly traded firm data.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2483.

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Length: 29 pages
Date of creation: Dec 2006
Date of revision:
Publication status: published in: De Economist, 2011, 159 (3), 279-303
Handle: RePEc:iza:izadps:dp2483

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Keywords: firm performance; management turnover;

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References

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  1. Khanna, Naveen & Poulsen, Annette B, 1995. " Managers of Financially Distressed Firms: Villains or Scapegoats?," Journal of Finance, American Finance Association, vol. 50(3), pages 919-40, July.
  2. Denis, David J. & Denis, Diane K. & Sarin, Atulya, 1997. "Ownership structure and top executive turnover," Journal of Financial Economics, Elsevier, vol. 45(2), pages 193-221, August.
  3. Klein, April & Rosenfeld, James, 1988. "Targeted share repurchases and top management changes," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 493-506, January.
  4. Parrino, Robert, 1997. "CEO turnover and outside succession A cross-sectional analysis," Journal of Financial Economics, Elsevier, vol. 46(2), pages 165-197, November.
  5. Bloom, Nicholas & Van Reenen, John, 2006. "Measuring and Explaining Management Practices Across Firms and Countries," CEPR Discussion Papers 5581, C.E.P.R. Discussion Papers.
  6. Ulrike Malmendier & Geoffrey Tate, 2009. "Superstar CEOs," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 124(4), pages 1593-1638, November.
  7. Coughlan, Anne T. & Schmidt, Ronald M., 1985. "Executive compensation, management turnover, and firm performance : An empirical investigation," Journal of Accounting and Economics, Elsevier, vol. 7(1-3), pages 43-66, April.
  8. Bruinshoofd,Allard & Weel,Bas,ter, 2001. "Manager to go? Performance dips reconsidered with evidence from Dutch football," Research Memorandum 018, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  9. Warner, Jerold B. & Watts, Ross L. & Wruck, Karen H., 1988. "Stock prices and top management changes," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 461-492, January.
  10. Bernd Frick & Robert Simmons, 2008. "The impact of managerial quality on organizational performance: evidence from German soccer," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(7), pages 593-600.
  11. Barber, Brad M. & Lyon, John D., 1996. "Detecting abnormal operating performance: The empirical power and specification of test statistics," Journal of Financial Economics, Elsevier, vol. 41(3), pages 359-399, July.
  12. Marianne Bertrand & Antoinette Schoar, 2003. "Managing With Style: The Effect Of Managers On Firm Policies," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(4), pages 1169-1208, November.
  13. Mark R. Huson, 2001. "Internal Monitoring Mechanisms and CEO Turnover: A Long-Term Perspective," Journal of Finance, American Finance Association, vol. 56(6), pages 2265-2297, December.
  14. Denis, David J & Denis, Diane K, 1995. " Performance Changes Following Top Management Dismissals," Journal of Finance, American Finance Association, vol. 50(4), pages 1029-57, September.
  15. Weisbach, Michael S., 1988. "Outside directors and CEO turnover," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 431-460, January.
  16. Farrell, Kathleen A. & Whidbee, David A., 2003. "Impact of firm performance expectations on CEO turnover and replacement decisions," Journal of Accounting and Economics, Elsevier, vol. 36(1-3), pages 165-196, December.
  17. B Frick & R Simmons, 2005. "The impact of managerial quality on organizational performance: evidence from German soccer," Working Papers 566927, Lancaster University Management School, Economics Department.
  18. repec:lan:wpaper:3596 is not listed on IDEAS
  19. Fee, C. Edward & Hadlock, Charles J., 2004. "Management turnover across the corporate hierarchy," Journal of Accounting and Economics, Elsevier, vol. 37(1), pages 3-38, February.
  20. Huson, Mark R. & Malatesta, Paul H. & Parrino, Robert, 2004. "Managerial succession and firm performance," Journal of Financial Economics, Elsevier, vol. 74(2), pages 237-275, November.
  21. Lawrence M. Kahn, 2000. "The Sports Business as a Labor Market Laboratory," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 75-94, Summer.
  22. repec:lan:wpaper:3702 is not listed on IDEAS
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  1. Policy fetishism
    by chris dillow in Stumbling and Mumbling on 2009-03-31 14:06:26

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