Different investor groups have differing dividend policy preferences that create clientele effects in which dividend policy of a firm is optimized for its investors.

Question

Quizplus · Accepted Answer

Different investor groups, such as income-seeking investors and growth-oriented investors, may have different preferences for a firm's dividend policy. This can create clientele effects, leading the firm to optimize its dividend policy to attract and retain its target investor group. Therefore, the statement is true.

Different Investor Groups Have Differing Dividend Policy Preferences That Create