The existence of dividend clientele suggests dividend policy is irrelevant in a world where transaction costs exist.

Question

Quizplus · Accepted Answer

Dividend clientele refers to the idea that investors have different preferences for dividends based on their individual tax situations or investment goals. Therefore, dividend policy may still be relevant even in a world with transaction costs because it can affect the composition of a company's shareholder base and potentially impact the stock price.

The Existence of Dividend Clientele Suggests Dividend Policy Is Irrelevant