Does Managerial Turnover Affect Football Club Share Prices?

20 Pages Posted: 14 May 2012

See all articles by Adrian R. Bell

Adrian R. Bell

University of Reading - ICMA Centre

Chris Brooks

University of Reading - ICMA Centre

Tom Markham

University of Reading - ICMA Centre

Date Written: May 14, 2012

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.

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

JEL Classification: M51, L83, G14

Suggested Citation

Bell, Adrian R. and Brooks, Chris and Markham, Tom, Does Managerial Turnover Affect Football Club Share Prices? (May 14, 2012). Available at SSRN: https://ssrn.com/abstract=2057601 or http://dx.doi.org/10.2139/ssrn.2057601

Adrian R. Bell

University of Reading - ICMA Centre ( email )

Whiteknights Park
P.O. Box 242
Reading RG6 6BA
United Kingdom

Chris Brooks (Contact Author)

University of Reading - ICMA Centre ( email )

Whiteknights Park
P.O. Box 242
Reading RG6 6BA
United Kingdom
+44 118 931 82 39 (Phone)
+44 118 931 47 41 (Fax)

Tom Markham

University of Reading - ICMA Centre ( email )

Whiteknights Park
P.O. Box 242
Reading RG6 6BA
United Kingdom

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