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The clientele effect hypothesis that has been proposed to explain how dividend policies affect stock prices...

The clientele effect hypothesis that has been proposed to explain how dividend policies affect stock prices suggests that a firm's dividend policy can provide information about management's behavior with respect to wealth maximization.

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False

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Answer #1

The given statement about clientele affect hypothesis is correct regarding Dividend policy because stock pricing will be suggesting the form of dividend policy can provide information about the management behaviour with respect to the wealth maximization because management will be trying to change the rate of the dividend in order to provide a reflection of their policies and their long-term view of the wealth maximization and share holders will also be reacting for the stock price change.

Given statement is TRUE.

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