Liquidity and Firm Characteristics: Evidence from Mergers and Acquisitions

37 Pages Posted: 13 Jul 2003

See all articles by Marc L. Lipson

Marc L. Lipson

University of Virginia - Darden School of Business

Sandra Mortal

University of Alabama - Culverhouse College of Commerce & Business Administration

Multiple version iconThere are 2 versions of this paper

Date Written: July 2006

Abstract

We explore factors affecting liquidity by examining the relation between liquidity changes and changes in firm characteristics around mergers and acquisitions. We find that spreads decline as the number of analysts, number of shareholders, number of market makers, firm size, and volume increase or as volatility decreases. Increased volume and firm size, and decreased volatility, are associated with increased depth. We find no evidence diversifying and non-diversifying mergers affect liquidity differently. We note that mergers and acquisitions are associated with reductions, on average, in spreads but that the reductions are fully explained by the accompanying changes in firm characteristics.

Note: Previously titled "The Impact of Mergers and Acquisitions on Liquidity and Market Value"

Keywords: Mergers and Acquisitions, Liquidity, Diversification, Analyst Following, Market Microstructure

JEL Classification: G0, G3, L1, D4, D5

Suggested Citation

Lipson, Marc Lars and Mortal, Sandra, Liquidity and Firm Characteristics: Evidence from Mergers and Acquisitions (July 2006). Available at SSRN: https://ssrn.com/abstract=390784

Marc Lars Lipson (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4837 (Phone)
434-243-5021 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/lipson.htm

Sandra Mortal

University of Alabama - Culverhouse College of Commerce & Business Administration ( email )

Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
986
Abstract Views
4,169
rank
21,903
PlumX Metrics