The behavior of CEOs

 

 

 

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

Qscore is the quality score for each picture – see below

 

 

 

 

Sample Solution

CEO turnover has reached a new high. A whopping 1,640 chief executives left or were ousted from their posts last year, according to a report from outplacement firm Challenger, Gray & Christmas, which called the toll “staggering.” Fortune called it “the Great CEO Exodus of 2019,” noting the high-profile exits of leaders from WeWork, Juul, eBay, Samsonite, and Nissan.While many CEOs left their jobs due to the usual reasons like retirements or new opportunities, 15 were shown the door amid “allegations of professional misconduct,” and another 20 left “amid scandal,” the Challenger report said.“Following the #MeToo movement, companies were determined to hold CEOs accountable for lapses in judgement pertaining to professional and personal conduct,

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