Table 4. Robustness check-effect of time...

Table 4.

Robustness check-effect of time until completion on stock performance using size of target to proxy for information asymmetry

	(1)	(2)	(3)
CAR/BHAR	Three months	One year	Two years
	Whole sample
Time until completion	0.002819**	0.000319	0.002588
Time until completion squared	−0.000019*	0.000006	0.000004
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	73	−26	−302
U-test (p-value)	0.06	–	–
U-test-implication	Weak inverse U	Monotone/U	Monotone/U
Observations	1,933	1,927	1,905
R²	0.113	0.075	0.074
Number of firms	1,234	1,229	1,210
	Opaque targets
Time until completion	0.005487***	0.008525**	0.009314
Time until completion squared	−0.000045***	−0.000075***	−0.000084
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	61	57	55
U-test (p-value)	0.00	0.00	0.11
U-test-implication	Strong inverse U	Strong inverse U	Monotone/U
Observations	541	540	538
R²	0.096	0.145	0.104
Number of firms	379	378	376
	Transparent targets
Time until completion	−0.008052	−0.013653	−0.000808
Time until completion squared	0.000211*	0.000285	0.000044
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	19	24	9
U-test (p-value)	0.13	0.25	0.49
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	788	784	770
R²	0.176	0.080	0.108
Number of firms	611	607	594

	(1)	(2)	(3)
CAR/BHAR	Three months	One year	Two years
	Whole sample
Time until completion	0.002819**	0.000319	0.002588
Time until completion squared	−0.000019*	0.000006	0.000004
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	73	−26	−302
U-test (p-value)	0.06	–	–
U-test-implication	Weak inverse U	Monotone/U	Monotone/U
Observations	1,933	1,927	1,905
R²	0.113	0.075	0.074
Number of firms	1,234	1,229	1,210
	Opaque targets
Time until completion	0.005487***	0.008525**	0.009314
Time until completion squared	−0.000045***	−0.000075***	−0.000084
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	61	57	55
U-test (p-value)	0.00	0.00	0.11
U-test-implication	Strong inverse U	Strong inverse U	Monotone/U
Observations	541	540	538
R²	0.096	0.145	0.104
Number of firms	379	378	376
	Transparent targets
Time until completion	−0.008052	−0.013653	−0.000808
Time until completion squared	0.000211*	0.000285	0.000044
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	19	24	9
U-test (p-value)	0.13	0.25	0.49
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	788	784	770
R²	0.176	0.080	0.108
Number of firms	611	607	594

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 size 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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