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The role of boards' misperceptions in the relation between managerial turnover and performance: Evidence from European football

Author

Listed:
  • Raphael Flepp

    () (Department of Business Administration, University of Zurich)

  • Egon Franck

    () (Department of Business Administration, University of Zurich)

Abstract

In this paper, we account for boards’ misperceptions when replacing a top manager by differentiating between managerial turnovers following actual poor performance and managerial turnovers following seemingly poor performance due to bad luck in order to investigate their subsequent effects on performance. We focus on managerial changes within football organizations and analyze dismissals from the top European leagues. To account for the mean reversion of performance, we create a control group of non-dismissals using the nearest neighbor approach. To account for boards’ misperceptions, we differentiate between dismissals and non-dismissals that occur either due to poor playing performance on the pitch or due to a sequence of bad luck, which is measured using "expected goals". We find that dismissals after poor playing performance on the pitch increase subsequent performance, while dis-missals after a series of bad luck do not. Our results have important implications regarding the design of future turnover studies and the costs of boards’ ineffective turnover decisions.

Suggested Citation

  • Raphael Flepp & Egon Franck, 2019. " The role of boards' misperceptions in the relation between managerial turnover and performance: Evidence from European football," Working Papers 380, University of Zurich, Department of Business Administration (IBW).
  • Handle: RePEc:zrh:wpaper:380
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    File URL: http://repec.business.uzh.ch/RePEc/zrh/wpaper/380_IBW_full.pdf
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    More about this item

    Keywords

    football; managerial turnover; performance; football;

    JEL classification:

    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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