The clientele effect supports the needs of stockholders by recognizing their preferences with respect to taxes. ​

Clientele Effect

The theory suggesting that the types of dividends a company pays can attract different types of investors.

Stockholders

Individuals or entities that hold stock in a company, thereby owning a portion of the company and having certain rights, such as the right to vote on corporate matters.

Taxes

Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures.