Shares in Australia's top contractor closed 3.3 percent lower, adding to a 3.1 percent fall a day earlier after Chairman David Mortimer resigned, with investors stunned that CEO David Stewart was let go just eight months into the job.
The move came despite fresh assurances the firm would meet its 2012 profit guidance.
Leighton's board, which includes representatives from German parent Hochtief, said Stewart had stabilized the company, but fresh blood was needed, without any other explanation.
"It's come as a bit of a surprise to us. ... There's a lot of uncertainty about what's caused it," said Frank Gooch, Chief Executive of Milton Corp, a top 10 institutional shareholder in Leighton.
The move to replace Stewart came after Leighton suffered a big loss in fiscal 2011, hit by problems at its two biggest projects and writedowns on its Middle Eastern joint venture, largely incurred under its former CEO Wal King.
The changes reignited talk that Hochtief and its major shareholder ACS want to exert more control over Leighton, following King's departure after 23 years at the helm.
ACS declined to comment on the reasons for Stewart's exit.
"They just hung him out to dry. I think it's a bit cruel," said David Spry, research manager at FW Holst.
Analysts in Spain said the departure was not so surprising given Leighton's opposition to ACS's takeover moves on Hochtief and its demands for independence.
"Leighton had quite an aggressive attitude against ACS, like Hochtief, so given the circumstances his departure makes sense," said Daniel Gandoy, analyst of Portuguese bank BPI in Madrid.
Leighton appointed Hamish Tyrwhitt, managing director of Leighton Asia, to replace Stewart.
It also named Stephen Johns as the new chairman to replace Mortimer, who quit after 14 years on the board and four years as chairman.
"The board is confident that the business has a stable base from which to build and we believe that new leadership is now required for Leighton to move forward and capitalise on the significant growth opportunities that lie ahead," Johns said in a statement.
Tyrwhitt had been considered a favourite for the top job when King retired. King remains a consultant to the company.
"We understand the new CEO is quite capable and expect him to do a good job. But it would be interesting to understand all of the events that led up to the changes," said Milton's Gooch.
Investors were concerned that no one at the top had taken responsibility for the problems on Leighton's Brisbane Airport Link road and tunnel project and a desalination plant in the state of Victoria.
Mortimer's resignation came on top of resignations by several senior executives over the past year.
The company reaffirmed its profit guidance for the 2012 financial year on Thursday, expecting a return to a profit between A$600 million and A$650 million.
"The unilateral decision of Mortimer to undertake a large write-off in three different projects announced in March that lead to a significant profit warning for Leighton's 2011 earnings was perhaps one of the most important disagreements with ACS/Hochtief," BPI's Gandoy said.
