Financial Performance and Corporate Governance in the European Football Industry, pp. 280-308

Panagiotis E. Dimitropoulos
Athanasios Tsagkanos

The aim of this paper is to analyze the impact of corporate governance quality (namely board size, board independence, managerial ownership, institutional ownership, and CEO duality) on the profitability and viability of European Union’s football clubs over the period 2005-2009. Empirical results documented that corporate governance quality (higher managerial and institutional ownership, increased board size and independence, and the separation of the CEO and chairman roles) leads to greater levels of profitability and viability. Further analysis based on clubs’ profitability and viability indicates that sound governance mechanisms are also important for those clubs with intense problems of insolvency and low financial performance. The results of this study dictate the necessity of corporate governance principles for protecting the interests of shareholders and various stakeholders and for maximizing the clubs’ economic results and social return. The empirical findings are robust to several sensitivity tests concerning the specification of the models and the measures of financial performance.