Agency Theory and Principal–Agent Alignment Masks: An Examination of Penalties in the National Football League

Abstract

Rule changes are not uncommon in most professional sports, and scholars often study the effects of such changes. Given the substantial increase in rule changes and the substantially different nature of new rules (e.g., safety driven) in the National Football League since 2005, the authors examined how coaches adapt to the changing National Football League in terms of coaching strategies and securing subsequent head coach positions in the labor market. Using agency theory, the authors identified agency misalignment when coaches employ strategies whereby incurring more penalties results in on-field success, but decreases their likelihood of obtaining future employment as a head coach. In addition, the authors found evidence that, regardless of the penalties accrued, former coaches who previously held more head coaching jobs, are Black, or are younger have higher chances of securing subsequent head coaching positions. However, these attributes do not increase team performance, indicating that coach-hiring decisions are incongruent with determinants of coach performance.