Empirical evidence supports the existence of a clientele

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Empirical evidence supports the existence of a clientele effect; this implies that every time a company revises its dividend policy to pay out a greater (or smaller) percentage of earnings the characteristics of its shareholders also change. For example a firm with a higher payout ratio may expect to have more shareholders in lower tax brackets. Suppose that lower-income people are also more risk averse. Would this have an effect on the value of the firm?

Reference no: EM132616474

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