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:3/31/2016)... , March 31, 2016  Genomics firm Nabsys has ... CEO, Barrett Bready , M.D., who returned to ... the original technical leadership team, including Chief Technology Officer, ... Product Development, Steve Nurnberg and Vice President of Software ... the company. Dr. Bready served as CEO ...
(Date:3/21/2016)... -- Unique technology combines v ...   Xura, Inc. (NASDAQ: ... communications services, today announced it is working alongside SpeechPro ... particularly those in the Financial Services Sector, the ability ... a mobile app, alongside, and in combination with, traditional ...
(Date:3/14/2016)... 14, 2016 NXTD ) ("NXT-ID" or ... market, announces the airing of a new series of commercials ... of March 21 st .  The commercials will air on ... Squawk on the Street show. --> NXTD ) ... mobile commerce market, announces the airing of a new series ...
Breaking Biology News(10 mins):
(Date:4/29/2016)... ... April 29, 2016 , ... During a ... technology into a viable company, CereScan’s CEO, John Kelley, joined other Denver business ... leader and mentor in the Denver area business community, shared his top fundamental ...
(Date:4/29/2016)... , ... April 29, 2016 , ... Intelligent Implant Systems ... the FDA via 510(k) for sale in the United States. These components expand ... thoraco-lumbar fusions. With one-level sales beginning in October of 2015, the company has ...
(Date:4/28/2016)... , April 28, 2016 ... Stirling, and Brayton Cryocoolers), Service (Technical Support, Product Repairs ... Geography - Global Forecast to 2022", published by MarketsandMarkets, ... 2.94 Billion by 2022, at a CAGR of 7.29% ... market data Tables and 94 Figures spread through 159 ...
(Date:4/28/2016)... ... April 28, 2016 , ... ... for Connecticut's innovative, growing companies, today announced the launch of VentureClash , ... (fintech) companies. , “VentureClash looks to attract the best early-stage companies ...
Breaking Biology Technology: