Which of the following describes the clientele effect concept of dividend policy?
A) The clientele effect looks at investor preferences for dividends compared to share repurchase programs.
B) The clientele effect defines the relationship between the shareholder and a stockbroker.
C) The clientele effect focuses entirely on the stability of dividends.
D) Modern corporations do not consider shareholders to be "clients."

Question

Quizplus · Accepted Answer

The clientele effect concept of dividend policy refers to the idea that different types of investors have different preferences for dividend payouts versus share repurchase programs. As a result, a company's dividend policy can attract or repel certain groups of investors.

Which of the Following Describes the Clientele Effect Concept of Dividend