What Determines a CEO's Impact on Financial Performance in the Swedish Commodity Industry

Abstract: Among the many factors shaping company financial performance, the CEO is arguably one of the most critical. But what is it that distinguishes one CEO's ability to produce performance from another? Being such a well-researched field, it still lacks consensus regarding which CEO factors that affect a CEO's ability to produce performance. We examined the impact of CEOs' education and tenure on financial performance measured by ROCE (return on capital employed) and EBITDA (earnings before interest, tax, depreciation and amortization) margin through the lens of Human Capital Theory. The context of the study are three sectors in the Swedish commodities industry: steel- and metal, lumber and wood, and paper. These sectors are seen as some of the most homogenous industries, therefore a good fit with the scope of the study in order to isolate CEO- factors as much as possible from other factors such as differentiated products. The study was conducted through gathering data by sending a survey to 126 CEOs of Swedish companies operating in these three industries. The survey responses were complemented with financial data collected from the respondents' companies' 2019 financial statements online. The results from the regression analysis were fruitful but mostly statistically insignificant, and therefore no conclusions were able to be drawn. Thus, we were unable to provide a definitive answer to the research question. However, the data did indicate that education may have a positive effect on financial performance, in line with Human Capital Theory's predictions, although lacking statistical significance on the 5% significance level.