The clientele effect argues that only firms with high payout ratios can successfully attract investors.

Question

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The clientele effect argues that investors prefer stocks with payout policies that fit their needs, whether it be high or low payout ratios. Therefore, firms with both high and low payout ratios can successfully attract investors who are looking for the specific payout policy that fits their investment strategy.

The Clientele Effect Argues That Only Firms with High Payout