Does Negative Performance Feedback Cause Managerial Turnover? The Moderating Role of Race

Abstract

While many governments have adopted performance-based accountability systems, how negative performance feedback affects managerial outcomes remains underexplored. We examine the impact of negative performance feedback on managerial turnover and the moderating role of race. We expect negative performance feedback to increase managerial turnover, with a greater impact for minority managers than their white counterparts. Using data from the Financial Integrity Rating System of Texas, we employ a regression discontinuity design with close performance scores. The results show that lower performance ratings cause an increase in the turnover of school district superintendents. This effect is larger for Hispanic superintendents, particularly when there is a higher degree of racial congruence between the school boards and Hispanic superintendents. The findings provide causal evidence for the impact of negative organizational performance on managerial turnover and indicate differential impact by the race of public managers.