EXPRESS: Comprehensive vs. Speed: Investor Reactions to Due Diligence Length under Varying Industry Conditions

Acquisition decision-making often entails significant information asymmetries, which acquirers seek to mitigate through comprehensive due diligence analyses. While due diligence can help reduce the risk of acquisition failure, conducting thorough due diligence also slows down the decision-making process, consumes resources, and delays the realization of synergies. Drawing on decision comprehensiveness theory, we argue that the relationship between due diligence speed and acquirer stock market returns follows an inverted U-shaped curve, in which the optimal point is contingent on the decision-making context. Based on an analysis of a sample of 501 acquisitions of S&P 1500 firms, we find support for the existence of a curvilinear relationship and the moderating effects of industry complexity and dynamism, but not industry munificence. Our findings contribute to an enhanced understanding of the due diligence process and extend the existing research on the influence of external contingency factors in optimizing comprehensiveness and speed in strategic decision-making.