Purpose of paper
• Does testosterone affect the behaviour of CEOs and does this affect the performance of acquisitions.
• How might testosterone affect behaviour in acquisitions?
Use theory and literature in Phycology, Finance, …..
• We measure performance of acquisitions by:
Change in stock prices in the short and long run
Accounting performance measures.
Covered in the “theory part” of the course
• We need to be able to “measure“ the level of Testosterone in (male) CEOs – content of this lecture.
References
• Levi, M., Kai Li, and Feng Zhang, 2010, Deal or no deal: Hormones and the mergers and acquisitions game, Management Science 56, 1462-1483.
• Carré, Justin M, and Cheryl M McCormick, 2008, In your face: Facial metrics predict aggressive behaviour in the laboratory and in varsity and professional hockey players, Proceedings of the Royal Society B: Biological Sciences 275, 2651-2656.
• Kamiya, Shinichi, Y. Han Kim, and Soohyun Park, 2018, The face of risk: Ceo facial masculinity and firm riske, European Financial Management.
Picture measurement of fWHR ratio
• We use pictures to measure the level of testosterone proxied by the facial-with-hight ratio (fWHR).
• We follow more or less Appendix A in:
• Kamiya, Shinichi, Y. Han Kim, and Soohyun Park, 2018, The face of risk: Ceo facial masculinity and firm risk, European Financial Management.
Method
• For each target and acquirer CEO:
Collect three different pictures of the same CEO
Calculate an average fWHR
Calculate a weighted fWHR for each CEO