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 market-adjusted share price rise of 0.3%, whilst a resignation leads to a drop in share price of 1% that continues for a trading month thereafter, cumulating in a negative abnormal return of over 8% from a trading day before the event. 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.aestimatio, the ieb international journal of finance, 2013. 7: 02-21 © 2013 aestimatio, the ieb international journal of finance ¿la gestión del volumen de negocios afecta a la cotización bursátil de los clubs de fútbol?Bell, Adrian R. Brooks, Chris Markham, TomResumen Este artículo analiza las 53 destituciones y dimisiones de directivos que han tenido lugar en los 16 clubs de fútbol ingleses que cotizan en bolsa durante las temporadas 2000/01 a 2008/09. Los resultados obtenidos demuestran que el día después del anuncio de una destitución tiene lugar, en promedio, un incremento del 0,3% en el precio ajustado de la acción, mientras que una dimisión se traduce en una caída del 1% que se prolonga durante un mes, dando lugar a un rendimiento acumulado negativo anormal cifrado en más del 8% respecto de la sesión precedente al día del anuncio de la dimisión. Estos resultados son intuitivos, y sugieren que la destitución de un directivo con bajo rendimiento para el club puede ser bienvenida por los mercados, a modo de una posible solución para mejorar los resultados obtenidos en futuros partidos, mientras que la pérdida de un directivo capacitado vía dimisión, que por lo general progresa a una posición superior, resultará en una caída en el precio de las acciones del club. El artículo también pone de manifiesto que, mientras que el impacto de las salidas de directivos en la volatilidad del precio de las acciones no está tan claro, la especulación en la prensa es un factor muy común en la preparación de tal evento. Palabras clave:futbol, Rendimiento de las acciones, Volatilidad, Cambio directivo, Caso de estudio.1 Association football is commonly referred to as 'soccer' in the USA in order to distinguish the game from American football. Throughout the paper we use the term 'football' rather than 'soccer'.2 Bell et al. (2013) present a model to evaluate football manager performance and they find several managers in their sample who appeared to have been sacked prematurely regarding the on-field results they achieved.Does managerial tur...

Human resources turnover as an asset acquisition and divestiture process: Evidence from the U.K. football industry

“…Within the football economics literature, our work extends previous studies on the drivers and the effects of football manager changes (e.g., see Bell, Brooks, & Markham, 2013;Bruinshoofd & Ter Weel, 2003;de Dios Tena & Forrest, 2007). We differ in considering turnover in football players.…”

New players? New managers? New stadiums? Which investments drive football club performance?

“…In addition, prior research finds that stock returns are negatively associated with the announcement of hiring of a new manager and positively associated with the announcement of a dismissal of a manager (Allouche and Soulez, 2005;Bell et al, 2013). Recent work by Wilson et al (2020) also shows that the effects of managerial changes on team performance differs between top half and bottom half teams.…”

“…In addition, prior research finds that stock returns are negatively associated with the announcement of hiring of a new manager and positively associated with the announcement of a dismissal of a manager (Allouche and Soulez, 2005; Bell et al. , 2013).…”

Influence of stakeholders' perception on value creation and measurement: the case of football clubs

“…Human resources, players, coaches, managers and relational resources including relationships with local government units are worth mentioning in this category. With regard to human resources such as coaches and managers, prior literature also emphasises their prominent role in affecting football club value and is highlighted not only in studies on the main Western European football leagues (Shareef and Davey, 2005;Bell et al, 2013;Risaliti and Verona, 2012) but also in studies on Eastern European leagues (Wyszynski, 2016;Ros ¸ca, 2012Ros ¸ca, , 2014.…”