Table 2. Effect of time until completion...

Table 2.

Effect of time until completion on stock performance using accruals quality of target to proxy for information asymmetry

	(1)	(2)	(3)
CAR/BHAR	Three months	One year	Two years
	Whole sample
Time until completion	0.002900**	0.001223	0.007954
Time until completion squared	−0.000028***	−0.000018	−0.000076
Control variables and fixed effect	Y	Y	Y
Optimum time until completion(days)	52	34	52
U-test (p-value)	0.02	0.37	0.09
U-test-implication	Strong inverse U	Monotone/U	Weak inverse U
Observations	1,499	1,494	1,478
R²	0.112	0.076	0.072
Number of firms	979	974	959
	Opaque targets
Time until completion	0.002322	0.047026***	0.050680**
Time until completion squared	−0.000100	−0.001469***	−0.001605***
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	12	16	16
U-test (p-value)	0.35	0.00	0.02
U-test-implication	Monotone/U	Strong inverse U	Strong inverse U
Observations	623	622	615
R²	0.226	0.307	0.346
Number of firms	498	497	490
	Transparent targets
Time until completion	0.002919	−0.000361	0.003738
Time until completion squared	−0.000033**	−0.000015	−0.000045
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	44	−12	42
U-test (p-value)	0.07	–	0.24
U-test-implication	Weak inverse U	Monotone/U	Monotone/U
Observations	561	559	556
R²	0.165	0.155	0.062
Number of firms	426	424	421

	(1)	(2)	(3)
CAR/BHAR	Three months	One year	Two years
	Whole sample
Time until completion	0.002900**	0.001223	0.007954
Time until completion squared	−0.000028***	−0.000018	−0.000076
Control variables and fixed effect	Y	Y	Y
Optimum time until completion(days)	52	34	52
U-test (p-value)	0.02	0.37	0.09
U-test-implication	Strong inverse U	Monotone/U	Weak inverse U
Observations	1,499	1,494	1,478
R²	0.112	0.076	0.072
Number of firms	979	974	959
	Opaque targets
Time until completion	0.002322	0.047026***	0.050680**
Time until completion squared	−0.000100	−0.001469***	−0.001605***
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	12	16	16
U-test (p-value)	0.35	0.00	0.02
U-test-implication	Monotone/U	Strong inverse U	Strong inverse U
Observations	623	622	615
R²	0.226	0.307	0.346
Number of firms	498	497	490
	Transparent targets
Time until completion	0.002919	−0.000361	0.003738
Time until completion squared	−0.000033**	−0.000015	−0.000045
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	44	−12	42
U-test (p-value)	0.07	–	0.24
U-test-implication	Weak inverse U	Monotone/U	Monotone/U
Observations	561	559	556
R²	0.165	0.155	0.062
Number of firms	426	424	421

Notes:

Regressing our performance measure (CAR/BHAR) on time until deal completion and its squared term for different periods post-merger, the table is a combined test of the due diligence hypothesis and the overdue hypothesis. To test the role played by information asymmetry of the target, the sample is partitioned into opaque and transparent targets using the accrual quality of the target as a proxy for information asymmetry. Control variables include the national- and firm-level and deal-specific variables as explained in the Appendix. Firm fixed effect is included in all models and the optimum time until deal completion and the results of the stringent test of quadratic relation, following Lind and Mehlum (2010) are also reported. Standard errors are corrected for heteroscedasticity and clustered at the firm level.

***p < 0.01,

**p < 0.05;

*p < 0.1

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