Sex hormone-crazed CEOs run amok, says M&A study: Updates

"Young male CEOs appear to be combative": They are more likely to attempt business takeovers, resist others' offers to buy them out, and especially to withdraw an offer, acting "against their (own and shareholders') interest" to preserve their perceived "dominance" over rival male bosses, report three University of British Columbia scholars, after studying 350 M&A offers in 1997-2007.

There is "a significant hormone effect in mergers and acquisitions," according to "Deal or No Deal: Hormones and the Mergers and Acquisitions Game," by Maurice Levi, Kai Li and Feng Zhang, in in the current issue of Management Science, edited by Philadelphia-based University of Pennsylvania Wharton School scholar Gerard Cachon.

I sent Prof. Levi a note asking what he expects to find when he starts measuring the impact of hormones on female boss decision-making. NEW: "We have already begun investigating the role of gender diversity on corporate boards," he replied, adding, "My co-authors and I have been pleasantly surprised by the wide and intense interest in our testosterone study.

UPDATE: I sent the study to a string of Philadelphia dealmakers and asked, Do deals run on hormones?

"Absolutely. Resounding and unanimous." - Michael DiPiano, NewSpring Capital.

"There are many influences on a transaction beyond the financial statements..." - Patrick Hanraty, PNC Cobblestone Harris Williams.

"Being a good observer and questioner with an unsentimental view of human nature, and deep operational experience, makes a successful acquirer. And I'm not sure if that has to do with testosterone, or estrogen. But I got a good laugh out of reading this." - Andrew Greenberg, Fairmount Partners.

"This is a pretty funny paper. No, I don't buy the analysis. It's like a Freakonomics analysis." - J. Scott Victor, SSG.

Victor added: "I do believe that youth and inexperience by some CEOs do drive, to some degree, M&A activity in start-up tech and Internet deals." But not for big boys, who buy and sell soberly, for strategic and financial reasons. Of course, for today's troubled companies, "the distress of the seller" is also a factor, he added. Does stress inhibit hormones? "Sometimes testosterone levels increase in distressed transactions because of all of the stress involved..."

One respondent passed the question to his audit committee, which gleefully piled up examples of enormous hormonally stupid deals: 

- "KKR acquiring RJR Nabisco" after a ruinous top-this bidding war.
- "Time Warner agreeing to sell to AOL, an amazingly bad decision." 
- "eBay acquiring Skype. Which was led by a female CEO." 
- "The recent Dell-HP fight that resulted in almost a 300% price gain for (target) 3-Par."

I won't repeat what they said about news-business deals.