The observed empirical fact that stocks attract particular investors based on the firm's dividend policy and the resulting tax impact on investors is called the _________________.

Question

Quizplus · Accepted Answer

The clientele effect refers to the phenomenon where stocks attract particular groups of investors who are attracted to the firm's dividend policy due to the different tax treatments of dividends. This effect explains why companies with high dividend payouts might attract investors in higher tax brackets looking for tax advantages, and vice versa.

The Observed Empirical Fact That Stocks Attract Particular Investors Based