Previous studies on the choice of stock payment in M&A mainly focus on managerial private information. This study shows that managers also learn new firm-specific information from financial markets in making this decision. The acquirer's stock price firm-specific information increases the stock-payment-to-Q sensitivity. The target's stock price firm-specific information decreases the stock payment probability. Further analyses on deal and firm characteristics as well as shareholder wealth in stock mergers support the managerial learning argument. Overall, this study highlights a new set of information that affects the form of merger payment in mergers and acquisitions.