1 The Effect of Human Resource Turnover on Shareholder Wealth: Evidence from the UK Football Industry

Abstract. Empirical research over the past three decades has given inconclusive evidence regarding the relationship between changes in top management and firm performance. In this paper we attempt to shed further light on the turnover-performance linkage by looking also at the effects of changes in other key ingredients of the human capital mix. We frame our analysis within the Resource-Based View (RBV) of the firm, according to which decisions about the acquisition and dismissal of significant and distinctive resources should positively affect the potential for sustainable competitive advantage in the long term. However, in the short term, the RBV posits an inverse relationship when the costs of critical human resources are perceived to exceed their marginal productivity. In our empirical analysis, we select to study listed clubs from the UK football soccer industry. The professional sports industry is well suited for our purposes since it is labor-intensive, and, human capital turnover is highly regulated, monitored and accounted for. Our results give support to the RBV since both the hiring of coaches and the acquisition of players has a negative impact on stock returns around the date of the event. On the other hand, we find tha