Table 6. Robustness check- effect of...

Table 6.

Robustness check- effect of time until completion on stock performance using Tobin’s Q of target to proxy for information asymmetry

	(1)	(2)	(3)
CAR/BHAR	Three months	One year	Two years
	Whole sample
Time until completion	0.004153	0.005862	0.016658
Time until completion squared	−0.000044	−0.000060	−0.000235
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	42,745	44,240	31,860
U-test (p-value)	–	–	–
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	806	804	794
R²	0.072	0.148	0.115
Number of firms	644	642	632
	Opaque targets
Time until completion	0.008008*	0.013893	0.042730*
Time until completion squared	−0.000123	−0.000235	−0.000806*
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	29,348	26,578	23,859
U-test (p-value)	–	–	–
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	397	397	394
R²	0.210	0.353	0.333
Number of firms	327	327	324
	Transparent targets
Time until completion	−0.005631	−0.010377	−0.013403
Time until completion squared	0.000094	0.000121	0.000103
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	26,825	38,745	58,341
U-test (p-value)	–	–	–
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	409	407	400
R²	0.312	0.153	0.224
Number of firms	352	350	343

	(1)	(2)	(3)
CAR/BHAR	Three months	One year	Two years
	Whole sample
Time until completion	0.004153	0.005862	0.016658
Time until completion squared	−0.000044	−0.000060	−0.000235
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	42,745	44,240	31,860
U-test (p-value)	–	–	–
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	806	804	794
R²	0.072	0.148	0.115
Number of firms	644	642	632
	Opaque targets
Time until completion	0.008008*	0.013893	0.042730*
Time until completion squared	−0.000123	−0.000235	−0.000806*
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	29,348	26,578	23,859
U-test (p-value)	–	–	–
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	397	397	394
R²	0.210	0.353	0.333
Number of firms	327	327	324
	Transparent targets
Time until completion	−0.005631	−0.010377	−0.013403
Time until completion squared	0.000094	0.000121	0.000103
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	26,825	38,745	58,341
U-test (p-value)	–	–	–
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	409	407	400
R²	0.312	0.153	0.224
Number of firms	352	350	343

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 Tobin’s Q 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 and

*p < 0.1

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