Clientele Effect

外汇网2021-06-19 13:33:26 93

The theory that a company's stock price will move according to the demands and goals of investors in reaction to a tax, pidend or other policy change affecting the company. The clientele effect assumes that investors are attracted to different company policies, and that when a company's policy changes, investors will adjust their stock holdings accordingly. As a result of this adjustment, the stock price will move.

Taobiz explains Clientele Effect

Consider a company that currently pays a high pidend and has attracted clientele whose investment goal is to obtain stock with a high pidend payout. If the company decides to decrease its pidend, these investors will sell their stock and move to another company that pays a higher pidend. As a result, the company's share price will decline.

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