Why Life is Short as King of the Hill

Abstract: During the last years, CEO turnover has increased considerably. In 2018, the turnover rate reached an all-time high, and the trend is especially evident in Sweden. Although the consequences of involuntary CEO changes are serious, the causes of the phenomenon have not been investigated before. Consequently, this thesis takes a qualitative approach toward the causes of the increased CEO turnover in Swedish Large Cap companies during the time period of 2015-2020. The study was conducted through 12 interviews with chairs and board members of Swedish Large Cap companies that have undergone involuntary CEO changes within the set time frame. Corporate governance theory, together with open systems theory, was used to analyze and contextualize the causes presented by the respondents. The findings demonstrate that both external and internal causes impact the decision of CEO dismissal. New external factors, including higher demands for transparency and tighter legislation, aggravates internal factors. This results in a higher speed of change, which increases the need to change strategy and leadership. Simultaneously, the external factors increase the demands on the CEO, which causes the CEO to lose energy and the CEO's performance to deteriorate. As a result, the board loses confidence in the CEO's ability to fulfill the agreement and ultimately dismisses the CEO. The thesis reveals that CEO dismissals are more complex than solely personal characteristics, and contributes by increasing understanding on how to avoid recruiting the wrong person or having to dismiss a newly recruited CEO after a short period of time.