High Testosterone Levels Causes Self-Destructive CEO Behaviour

By Patrick Driessen

Being involved in a lot of M&A activities myself, I am often reading about negotiating, dealmaking, psychology and the science behind human emotions to help me improve my knowledge and skills. As you might know; continues learning is an important key for success and happiness!

This week I was laughing out loud (LOL) when I read the new Management Science Study, which concluded that 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!

Again it gives evidence of a couple of weak spots in our male behaviour, which can be used to your benefit if you know how to drive and/or manipulate that same behaviour. Some of the conclusions in this new study are in line with what I wrote in a previous story titled "The Power of Female Beauty".

According to the study (titled “Deal or No Deal: Hormones and the Mergers and Acquisitions Game") published in the September issue of Management Science, one might expect M&A bids to follow analysis of business advantage. However, the authors of the study find that more human factors are also at work...

The researchers found a strong association between male CEOs being young (under 45 yrs) and their withdrawal rate of initiated M&As, characterizing these rejectionist younger executives as showing dominance-seeking behaviour. “High testosterone responders tend to reject low offers even though this is against their interest", one of the study authors stated.

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 found out 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.

Since the authors categorized CEO’s under age 45 as young for the purposes of this study, I am sure it does apply to many exec leaders with high levels of testosterone.

A tip for those who want to select the best female and male team members for their winning M&A team: a compelling behavioral study from 2008 revealed that men with high testosterone are attracted to women with feminine faces and women with high testosterone levels were more attracted to masculine men. Or..... to succeed in your M&A deals you just select a bunch of seniors with grey hair!

I hope you can use this wisdom to your benefit and will allow you to optimise your M&A dealings, resulting in more successful and fruitful deals!

Warm regards & success,


Patrick