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 sharebroker.
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 dividends versus share repurchase programs. Some investors prefer the steady income provided by dividends, while others prefer the flexibility of share repurchases. This can lead to a company's stock price being affected by its dividend policy, as different types of investors may be attracted to or deterred by changes in that policy.

Which of the Following Describes the Clientele Effect Concept of Dividend