The clientele effect supports the needs of stockholders by recognizing their preferences with respect to taxes.

Question

The clientele effect supports the needs of stockholders by recognizing their preferences with respect to taxes. ​

Quizplus · Accepted Answer

The clientele effect suggests that companies may change their dividend policies to attract investors with preferences for certain types of dividends, such as those that have lower tax rates. By recognizing these preferences, companies can increase their appeal to certain types of shareholders, which ultimately benefits stockholders.

The Clientele Effect Supports the Needs of Stockholders by Recognizing