The dividend ____ states that investors will tend to be attracted to firms that have dividend policies consistent with the investor's objectives.

Question

Quizplus · Accepted Answer

The dividend clientele effect states that investors with different dividend preferences will be attracted to firms that have dividend policies consistent with their goals. This means that investors who prefer high dividends will invest in companies that pay high dividends, while investors who prioritize capital gains will invest in companies that reinvest profits rather than paying dividends. The other answer choices relate to other theories of dividend policy.

The Dividend ____ States That Investors Will Tend to Be