An Analysis of Manager Turnovers in Markets with Strong Performance Signals : the Case of the English Soccer Leagues

We conduct an empirical analysis of the turnover of managers in a setting were the performance signal is very strong. The sample is hand-collected and includes all 1,951 turnovers (of which we classify 1,213 as dismissals) of soccer managers in the four major English soccer leagues between 1950 and 2008. We provide strong evidence that the performance of a team is the most important variable in explaining forced departures of managers. This relation is much stronger in our sample than in previous studies. For instance, the difference of theannual dismissal probability between the top and the bottom performance deciles amounts to 25 percentage points. We attribute this strong performance sensitivity of forced turnovers to the high precision of the performance signal and the low degree of information asymmetries in the soccer market.