Conference Agenda

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Session Overview
Thursday, 19/Mar/2020:
12:30pm - 2:00pm

Session Chair: Egon Franck
Location: Virtual Room 3

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

Raphael Flepp, Egon Franck

Universit├Ąt Z├╝rich, Schweiz

In this paper, we account for boards' misperceptions when replacing a top manager by differentiating between managerial turnover following actual poor performance and managerial turnover 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.

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