Managerial Turnover and Subsequent Firm Performance: Evidence from Danish Soccer Teams

Abstract

A number of researchers have used turnover among professional soccer coaches to study the effect of managerial turnover on firm performance. Most find no effect. Using data from the 19 most recent seasons of the premier soccer league in Denmark, this paper finds that teams that dismissed their coach subsequently performed significantly better. Performance improved exclusively in matches played at home, suggesting that home supporters may play an important role for the effectiveness of managerial turnover. The results are obtained after controlling for regression to the mean and are supported by various robustness checks, including nearest neighbor matching estimations. Interestingly, nearest neighbor matching estimates suggest that only teams that did in fact change their coach would benefit from doing so. Thus, based on insights from Danish soccer, it cannot in general be concluded that forcing managerial turnover is an effective way to boost performance. For specific firms, however, it may be an effective strategy.