Problematic Departures : CEO Exits in Large Swedish Publicly Traded Corporations

Abstract: The CEO departure is an important mechanism in corporate governance. It is by using this mechanism that boards of directors may discipline management. This study examines departures in the governance of large Swedish corporations.The study builds on three kinds of data. Thirteen former CEOs and chairmen in large Swedish publicly traded corporations have been interviewed. Also, the presentation of departures in annual reports of Swedish publicly traded corporations during the period 1987-1996 has been studied. Finally, two case studies were made of how the business press reports on departures. The study has used qualitative research methods and a particular aim has been to understand departures as processes.The results offer a more comprehensive understanding of departures as governance mechanisms. The problematic departure evolves contrary to expectations of normal departures. Important characteristics of the problematic departure are that they are often troubling to directors, chairmen and CEOs, while they to a general public appear as dramatic and interesting. This expressive character of the departure influences the management of the departure process. This is an important complement to how a departure often is perceived and classified as either voluntary or involuntary.This thesis describes the problematic departure as a process developing through four stages: sensing, taking action, departing, and recommencing. The process involves many important problems, such as the evaluation of the CEO, the question of which actors are to participate in such evaluation, and finally how information about the departure is to be managed.