Testosterone may drive aggressive takeovers: study

Thu Sep 9, 2010 10:32am EDT
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By Maggie Fox, Health and Science Editor

WASHINGTON (Reuters) - Younger chief executives with high testosterone levels may be more likely to try a hostile takeover -- and to get burned in the attempt, Canadian researchers said on Wednesday.

They found age was clearly linked with aggressive takeover behavior, and did a careful but indirect analysis to see if testosterone might be involved.

It likely is, said Kai Li and colleagues at the Sauder School of Business at the University of British Columbia.

"Young male CEOs appear to be combative: they are 4 percent more likely to be acquisitive and, having initiated an acquisition, they are over 20 percent more likely to withdraw an offer," Li's team wrote in the September issue of Management Science.

"Furthermore, a young target male CEO is 2 percent more likely to force a bidder to resort to a tender offer. We argue that this combative nature is a result of testosterone levels that are higher in young males."

Could experience be a factor, or rational thinking? "Our main thesis is hormones in a person's body may influence corporate decisions," Li said in a telephone interview.

"Personality, gender, age all matter."

The best way to test that would be to monitor CEOs in the midst of a takeover battle, but it was not practical, Li said. "But there are studies that already demonstrate a strong relationship between male age and testosterone," she said.   Continued...