The Role of Boards’ Misperceptions in the Relation Between Managerial Turnover and Performance: Evidence From European Football

UZH Business Working Paper Series, No. 380

25 Pages Posted: 19 Jan 2019 Last revised: 13 Feb 2019

See all articles by Raphael Flepp

Raphael Flepp

University of Zurich - Department of Business Administration (IBW)

Egon P. Franck

University of Zurich - Department of Business Administration (IBW)

Date Written: January 9, 2019

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 dismissals 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.

Keywords: Managerial Turnover, Performance, Football

JEL Classification: J44, L83

Suggested Citation

Flepp, Raphael and Franck, Egon P., The Role of Boards’ Misperceptions in the Relation Between Managerial Turnover and Performance: Evidence From European Football (January 9, 2019). UZH Business Working Paper Series, No. 380 . Available at SSRN: https://ssrn.com/abstract=3312801 or http://dx.doi.org/10.2139/ssrn.3312801

Raphael Flepp (Contact Author)

University of Zurich - Department of Business Administration (IBW) ( email )

Plattenstrasse 14
Zurich, 8032
Switzerland

Egon P. Franck

University of Zurich - Department of Business Administration (IBW) ( email )

Plattenstrasse 14
Zurich 8032
Switzerland
+41 1 634 28 45 (Phone)

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