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The Performance Effects Of Wise And Unwise Managerial Dismissals

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  • Raphael Flepp
  • Egon Franck

Abstract

The decision to dismiss a coach is challenging because poor performance tends to coincide with both bad luck and low coaching ability. We differentiate between dismissals following actual poor performance on the pitch (wise dismissals) and dismissals following seemingly poor performance due to bad luck (unwise dismissals). To categorize dismissals, we use “expected goals,” which are less vulnerable to random variation in match outcomes. Using data from European football, we find that wise dismissals increase subsequent performance compared to a control group of nondismissals with similarly poor performance on the pitch. However, unwise dismissals do not improve subsequent performance compared to a control group with similar strings of bad luck. (JEL D81, J44, L83)

Suggested Citation

  • Raphael Flepp & Egon Franck, 2021. "The Performance Effects Of Wise And Unwise Managerial Dismissals," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 186-198, January.
    • Handle: RePEc:bla:ecinqu:v:59:y:2021:i:1:p:186-198
    DOI: 10.1111/ecin.12924
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    References listed on IDEAS

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    17. Gerd Muehlheusser & Sandra Schneemann & Dirk Sliwka & Niklas Wallmeier, 2018. "The Contribution of Managers to Organizational Success," Journal of Sports Economics, , vol. 19(6), pages 786-819, August.
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    Cited by:

    1. Anil Özdemir & Helmut Dietl & Giambattista Rossi & Rob Simmons, 2022. "Are workers rewarded for inconsistent performance?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(2), pages 137-151, April.
    2. Raphael Flepp & Oliver Merz & Egon Franck, 2024. "When the league table lies: Does outcome bias lead to informationally inefficient markets?," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 414-429, January.
    3. Oliver Merz & Raphael Flepp & Egon Franck, 2021. "Underestimating randomness: Outcome bias in betting exchange markets," Working Papers 390, University of Zurich, Department of Business Administration (IBW).
    4. Raphael Flepp & Pascal Flurin Meier, 2024. "Struck by Luck: Noisy Capability Cues and CEO Dismissal," Working Papers 389, University of Zurich, Department of Business Administration (IBW).
    5. Meier, Pascal Flurin & Flepp, Raphael & Meier, Philippe & Franck, Egon, 2022. "Outcome bias in self-evaluations: Quasi-experimental field evidence from Swiss driving license exams," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 292-309.
    6. Kaori Narita & J.D. Tena & Babatunde Buraimo, 2022. "Causal and Consequences of Multiple Dismissals: Evidence from Italian Football League," Working Papers 202226, University of Liverpool, Department of Economics.
    7. Luigi Buzzacchi & Federico Caviggioli & Francesco Luigi Milone & Davide Scotti, 2021. "Impact and Efficiency Ranking of Football Managers in the Italian Serie A: Sport and Financial Performance," Journal of Sports Economics, , vol. 22(7), pages 744-776, October.
    8. Kaori Narita & Benjamin Holmes & Ian McHale, 2022. "Managerial Contribution to Firm Success: Evidence from Professional Football Leagues," Working Papers 202224, University of Liverpool, Department of Economics.
    9. Fabienne Jedelhauser & Raphael Flepp & Egon Franck, 2023. "Overshadowed by Popularity: The Value of Second-Tier Stars in European Football," Journal of Sports Economics, , vol. 24(8), pages 1026-1054, December.
    10. Pascal Flurin Meier & Raphael Flepp & Philippe Meier & Egon Franck, 2022. "Outcome Bias in Self-evaluations: Quasi-experimental Field Evidence of Swiss Driving License Exams," Working Papers 392, University of Zurich, Department of Business Administration (IBW).
    11. Kai Fischer & Justus Haucap, 2022. "Home advantage in professional soccer and betting market efficiency: The role of spectator crowds," Kyklos, Wiley Blackwell, vol. 75(2), pages 294-316, May.

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    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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