We examine how stock liquidity affects acquisitions. We hypothesize that liquidity enhances acquirer stock as an acquisition currency, especially when the target is relatively less liquid. As hypothesized, we find that more liquid firms have a greater likelihood of making stock acquisitions. Further, the in stock liquidity between acquirer and target firms increases payment with stock, reduces acquisition premiums, and improves acquirer announcement returns in equity deals. Consequently, firms take steps to improve stock liquidity prior to stock acquisitions. We use policy initiatives as exogenous shocks to firm liquidity to show that liquidity effects on acquisitions are plausibly causal.

中文翻译：

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流动股票作为收购货币

我们研究股票流动性如何影响收购。我们假设流动性增强了收购方股票作为收购货币的能力，尤其是当目标公司的流动性相对较差时。正如假设的那样，我们发现流动性更强的公司进行股票收购的可能性更大。此外，收购方和目标公司之间的股票流动性增加了股票支付，降低了收购溢价，并提高了收购方在股权交易中的公告回报。因此，公司在股票收购之前采取措施提高股票流动性。我们将政策举措视为对公司流动性的外生冲击，以表明流动性对收购的影响似乎是因果关系。