Would this have an effect on the value of the firm

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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 lowerincome people are also more risk averse. Would this have an effect on the value of the firm?

Reference no: EM131245514

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