Table 5. Robustness check-effect of time...

Table 5.

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

	(1)	(2)	(3)
ΔROA	One year	Two years	Five years
	Whole sample
Time until completion	0.000285	0.001066**	0.000221
Time until completion squared	−0.000002	−0.000008	−0.000001
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	77	68	104
U-test (p-value)	0.3	0.09
U-test-implication	Monotone/U	Weak inverse U	Monotone/U
Observations	1,723	1,626	1,277
R²	0.105	0.127	0.167
Number of firms	1,087	1,007	785
	Opaque targets
Time until completion	0.001174**	0.001894***	0.000518
Time until completion squared	−0.000009*	−0.000017***	−0.000004
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	63	57	58
U-test (p-value)	0.03	0.00	0.29
U-test-implication	Strong inverse U	Strong inverse U	Monotone/U
Observations	471	452	357
R²	0.125	0.137	0.205
Number of firms	333	312	257
	Transparent targets
Time until completion	−0.002816	−0.001342	0.004104
Time until completion squared	0.000049	0.000023	−0.000073
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	29	29	28
U-test (p-value)	0.15	0.35	0.06
U-test-implication	Monotone/U	Monotone/U	Weak inverse U
Observations	714	663	519
R²	0.124	0.136	0.336
Number of firms	545	501	385

	(1)	(2)	(3)
ΔROA	One year	Two years	Five years
	Whole sample
Time until completion	0.000285	0.001066**	0.000221
Time until completion squared	−0.000002	−0.000008	−0.000001
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	77	68	104
U-test (p-value)	0.3	0.09
U-test-implication	Monotone/U	Weak inverse U	Monotone/U
Observations	1,723	1,626	1,277
R²	0.105	0.127	0.167
Number of firms	1,087	1,007	785
	Opaque targets
Time until completion	0.001174**	0.001894***	0.000518
Time until completion squared	−0.000009*	−0.000017***	−0.000004
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	63	57	58
U-test (p-value)	0.03	0.00	0.29
U-test-implication	Strong inverse U	Strong inverse U	Monotone/U
Observations	471	452	357
R²	0.125	0.137	0.205
Number of firms	333	312	257
	Transparent targets
Time until completion	−0.002816	−0.001342	0.004104
Time until completion squared	0.000049	0.000023	−0.000073
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	29	29	28
U-test (p-value)	0.15	0.35	0.06
U-test-implication	Monotone/U	Monotone/U	Weak inverse U
Observations	714	663	519
R²	0.124	0.136	0.336
Number of firms	545	501	385

Notes:

Regressing our performance measure (change in return on assets) 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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