Navigation Links
High testosterone levels linked to self-destructive CEO behavior, says Management Science
Date:9/8/2010

High testosterone levels in CEOs negotiating mergers and acquisitions are linked to a higher rate of dropped deals and an increase in hostile takeover attempts, according to a new study in the current issue of Management Science, a journal of the Institute for Operations Research and the Management Sciences (INFORMS).

"Deal or No Deal: Hormones and the Mergers and Acquisitions Game" is by Maurice Levi, Kai Li, and Feng Zhang of the Sauder School of Business at the University of British Columbia. The study appears in the current issue of Management Science.

A podcast interview with Prof. Levi is at www.scienceofbetter.org/podcast/levi.html.

Although observers might expect M&A bids to follow analysis of business advantage, the authors find that more human factors are also at work.

"We find a strong association between male CEOs being young and their withdrawal rate of initiated M&As," the authors say, characterizing these rejectionist younger executives as showing dominance-seeking behavior. "High testosterone responders tend to reject low offers even though this is against their interest."

Younger CEOs are 4% more likely to initiate an attempt to acquire another company than older men, the study finds. In a more marked finding, male CEOs' relative youth increases their likelihood of withdrawing a merger/acquisition bid by as much as 20%.

The authors also find that when companies being approached about a merger or acquisition have younger CEOs, there is a greater likelihood by 2% - of a tender offer. Tender offers are used by bidding companies to bypass targeted companies' leadership and directly contact stockholders to purchase controlling shares.

In the study, the main effect of high testosterone was upon CEOs on the bidding side of negotiations to acquire another company, not the CEOs of the target company. Nevertheless, target CEOs' testosterone levels featured prominently when their refusal to continue negotiations led to a hostile takeover attempt.

The study builds upon a 2007 experiment conducted among students by Terence C. Burnham of Harvard University. In the two-player game, each team must agree how to divide a sum of "free" money or lose the entire sum. In this "ultimatum" game, high-testosterone men were more likely to reject what they perceived as low offers.

In the Burnham experiment, saliva from participants' mouths was swabbed to measure testosterone levels. In the current paper, age is used as a proxy for testosterone.

The current authors use data from Thomson's SDC database for more than 350 acquisition bids during the ten-year period from 1997-2007 to test the behavior of 'bidder' male CEOs. The average age of bidding firm males was 56 years old. The authors categorized CEO's under age 45 as young for the purposes of this study.


'/>"/>

Contact: Barry List
barry.list@informs.org
443-757-3560
Institute for Operations Research and the Management Sciences
Source:Eurekalert

Related biology news :

1. Natural selection for moderate testosterone surprises scientists
2. Scent of a woman: Mens testosterone responses to olfactory ovulation cues
3. Placental precursor stem cells require testosterone-free environment to survive
4. Increase in visceral fat during menopause linked with testosterone
5. Low sperm count may be associated with prenatal testosterone excess
6. CEAP study examines nitrogen, copper levels in Bay watershed
7. Newly discovered mechanism controls levels and efficacy of a marijuana-like substance in the brain
8. High levels of carbon dioxide threaten oyster survival
9. Rare and common genetic variations responsible for high triglyceride levels in blood
10. Posidonia meadows reflect pollution levels in the Mediterranean
11. Neural tissue contains imbalanced levels of proteins, U-M study finds
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:4/5/2017)... 5, 2017 Today HYPR Corp. , ... server component of the HYPR platform is officially ... end-to-end security architecture that empowers biometric authentication across Fortune ... already secured over 15 million users across the financial ... connected home product suites and physical access represent a ...
(Date:3/30/2017)... March 30, 2017  On April 6-7, 2017, Sequencing.com ... Genome hackathon at Microsoft,s headquarters in ... will focus on developing health and wellness apps that ... Hack the Genome is the first hackathon for ... world,s largest companies in the genomics, tech and health ...
(Date:3/28/2017)... , March 28, 2017 ... Biometrics), Hardware (Camera, Monitors, Servers, Storage Devices), Software (Video ... and Region - Global Forecast to 2022", published by ... in 2016 and is projected to reach USD 75.64 ... 2017 and 2022. The base year considered for the ...
Breaking Biology News(10 mins):
(Date:5/18/2017)... San Diego, California (PRWEB) , ... May 18, ... ... looking for team-building activities. The Tapas Cooking Challenge is a two-hour team-building ... from a delicious menu created by Chef Jodi Abel, which include items, such ...
(Date:5/18/2017)... SANTA BARBARA, CALIFORNIA (PRWEB) , ... May 17, ... ... risk management, technological innovation and business process optimization firm for the life sciences ... the Chairman of the UDIs and Traceability for Medical Devices conference in Brussels, ...
(Date:5/16/2017)... ... 16, 2017 , ... Genedata, a leading provider of advanced ... Group Meetings, which will be held in Boston, Cambridge/UK, Shanghai, and Tokyo. These ... data analysis and learn about the latest advances in screening technologies and applications. ...
(Date:5/16/2017)... , ... (PRWEB) May 16, ... ... Congress of the Chinese Association of Orthopaedic Surgeons (CAOS), long-standing development partners ... collaborated on an interbody spine surgery workshop to help expand knowledge of ...
Breaking Biology Technology: