Table 7. Robustness check-effect of time...

Table 7.

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

	(1)	(2)	(3)
ΔROA	One year	Two years	Five years
	Whole sample
Time until completion	0.001133	0.002953**	0.002331
Time until completion squared	−0.000016	−0.000045**	−0.000044
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	32,072	29,619	23,948
U-test (p-value)	–	–	–
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	717	672	504
R²	0.167	0.251	0.318
Number of firms	568	528	392
	Opaque targets
Time until completion	0.002430	0.005606**	0.004836
Time until completion squared	−0.000046	−0.000103*	−0.000078
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	23,711	24,375	27,992
U-test (p-value)	–	–	–
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	366	345	262
R²	0.173	0.209	0.353
Number of firms	299	282	214
	Transparent targets
Time until completion	−0.000504	−0.000455	0.000100
Time until completion squared	0.000017	0.000014	0.000008
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	13,579	14,547	−5,748
U-test (p-value)	–	–	–
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	351	327	242
R²	0.429	0.425	0.416
Number of firms	299	276	204

	(1)	(2)	(3)
ΔROA	One year	Two years	Five years
	Whole sample
Time until completion	0.001133	0.002953**	0.002331
Time until completion squared	−0.000016	−0.000045**	−0.000044
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	32,072	29,619	23,948
U-test (p-value)	–	–	–
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	717	672	504
R²	0.167	0.251	0.318
Number of firms	568	528	392
	Opaque targets
Time until completion	0.002430	0.005606**	0.004836
Time until completion squared	−0.000046	−0.000103*	−0.000078
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	23,711	24,375	27,992
U-test (p-value)	–	–	–
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	366	345	262
R²	0.173	0.209	0.353
Number of firms	299	282	214
	Transparent targets
Time until completion	−0.000504	−0.000455	0.000100
Time until completion squared	0.000017	0.000014	0.000008
Control variables and fixed effect	Y	Y	Y
Optimum time until completion (days)	13,579	14,547	−5,748
U-test (p-value)	–	–	–
U-test-implication	Monotone/U	Monotone/U	Monotone/U
Observations	351	327	242
R²	0.429	0.425	0.416
Number of firms	299	276	204

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 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

*p < 0.1

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