Featured Research

from universities, journals, and other organizations

Young, male, testosterone-fueled CEOs more likely to start or drop deals

Date:
September 8, 2010
Source:
University of British Columbia
Summary:
Too much testosterone can be a deal breaker, according to researchers. A new article shows that young CEOs with more of the steroidal hormone in their system are more likely to initiate, scrap or resist mergers and acquisitions.

Too much testosterone can be a deal breaker, according to Sauder School of Business researchers at the University of British Columbia. Their paper, to be published in the INFORMS journal Management Science on September 10, shows that young CEOs with more of the steroidal hormone in their system are more likely to initiate, scrap or resist mergers and acquisitions.

The study by Sauder Finance Professors Maurice Levi and Kai Li, and PhD student Feng Zhang, titled "Deal or No Deal: Hormones and the Mergers and Acquisitions Game," shows that testosterone -- a hormone associated with male dominance-seeking in competitive situations -- can be a negative factor in high-stakes decision making.

"We find a strong association between male CEOs being young and their withdrawal rate of initiated mergers and acquisition," says Prof. Levi, whose research relies on the established correlation between relative youth and increased levels of testosterone.

"For instance, young CEOs, who have higher levels of testosterone, tend to reject offers even when this is against their interest."

The study shows that younger CEOs operating with more testosterone in their systems are 20 per cent more likely to withdraw a merger or acquisition bid than their older counterparts. Young CEOs are also four per cent more likely to flex their managerial muscles and attempt to acquire other companies.

As well, when companies run by young male CEOs are targeted for a mergers or acquisitions, there is a two-per-cent greater chance the CEOs will resist, pushing the bidder to pursue a hostile takeover that bypasses company leadership.

The researchers analyzed 350 merger and acquisition bids in the United States between 1997 and 2007, using a securities database from Thomson SDC.

The Sauder study builds on a 2007 experiment by Harvard University Economics Prof. Terence Burnham, which examined the role of testosterone in the "ultimatum game," a negotiation between two people where participants often reject offers of free money, defying standard economic rationality.

In the two-player game, subjects had to agree on how to divide 40 dollars or risk losing it all. Participants who begin with the entire sum of money could offer only five dollars or 25 dollars to their competitor.

Burnham found that, among those considering the offers, participants with higher levels of testosterone were more likely to reject what they perceived as low offers, ending up with nothing as a result.


Story Source:

The above story is based on materials provided by University of British Columbia. Note: Materials may be edited for content and length.


Journal Reference:

  1. Maurice Levi, Kai Li, and Feng Zhang. Deal or No Deal: Hormones and the Mergers and Acquisitions Game. Management Science, September 10, 2010

Cite This Page:

University of British Columbia. "Young, male, testosterone-fueled CEOs more likely to start or drop deals." ScienceDaily. ScienceDaily, 8 September 2010. <www.sciencedaily.com/releases/2010/09/100908094926.htm>.
University of British Columbia. (2010, September 8). Young, male, testosterone-fueled CEOs more likely to start or drop deals. ScienceDaily. Retrieved April 23, 2014 from www.sciencedaily.com/releases/2010/09/100908094926.htm
University of British Columbia. "Young, male, testosterone-fueled CEOs more likely to start or drop deals." ScienceDaily. www.sciencedaily.com/releases/2010/09/100908094926.htm (accessed April 23, 2014).

Share This



More Mind & Brain News

Wednesday, April 23, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Study Says Most Crime Not Linked To Mental Illness

Study Says Most Crime Not Linked To Mental Illness

Newsy (Apr. 22, 2014) A new study finds most crimes committed by people with mental illness are not caused by symptoms of their illness or disorder. Video provided by Newsy
Powered by NewsLook.com
How Smaller Plates And Cutlery Could Make You Feel Fuller

How Smaller Plates And Cutlery Could Make You Feel Fuller

Newsy (Apr. 22, 2014) NBC's "Today" conducted an experiment to see if changing the size of plates and utensils affects the amount individuals eat. Video provided by Newsy
Powered by NewsLook.com
Do We Get Nicer With Age?

Do We Get Nicer With Age?

Newsy (Apr. 22, 2014) A recent report claims personality can change over time as we age, and usually that means becoming nicer and more emotionally stable. Video provided by Newsy
Powered by NewsLook.com
How to Master Motherhood With the Best Work/Life Balance

How to Master Motherhood With the Best Work/Life Balance

TheStreet (Apr. 22, 2014) In the U.S., there are more than 11 million couples trying to conceive at any given time. From helping celebrity moms like Bethanny Frankel to ordinary soon-to-be-moms, TV personality and parenting expert, Rosie Pope, gives you the inside scoop on mastering motherhood. London-born entrepreneur Pope is the creative force behind Rosie Pope Maternity and MomPrep. She explains why being an entrepreneur offers the best life balance for her and tips for all types of moms. Video provided by TheStreet
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins