Does Managerial Turnover Affect Football Club Share Prices?

Abstract:     
This paper analyses the 53 managerial sackings and resignations from 16 stock exchange listed English football clubs during the nine seasons between 2000/01 and 2008/09. The results demonstrate that on average, a managerial sacking results in a post-announcement day share price rise of 0.8%, whilst a resignation leads to a drop in share price (0.5%) that continues for a month thereafter, cumulating in a negative return of around 8%. These findings are intuitive, and suggest that sacking a poorly performing manager may be welcomed by the markets as a possible route to better future match performance, while losing a capable manager through resignation, who typically progresses to a superior job, will result in a drop in a club’s share price. The paper also reveals that while the impact of managerial departures on stock price volatilities is less clear-cut, speculation in the newspapers is rife in the build-up to such an event.

Number of Pages in PDF File: 20

Keywords: football, stock returns, volatility, management change, event study

JEL Classification: M51, L83, G14

working papers series