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There is a geographically varying dividend clientele effect consistent with the variations in risk aversion among different cultural groups.
A simplistic response would be to say that the directors had thrown money at shareholders to pump up the share price, being aware of the signalling effect of dividends and the clientele effect.
In addition, from the effect of each factor on the mortgage term, one can expect a clientele effect, in which home buyers in a relatively high tax bracket with high risk tolerance and many investment gain tax shields are likely to choose a long-term (30-year) mortgage in a low-rate environment; home buyers in a relatively low tax bracket with low risk tolerance and few investment gain tax shields are likely to choose a short-term (15-year) mortgage in a high-rate environment.
But the main question is whether, by observation of real data, this clientele effect can be empirically detected.
1977), 'Taxes, transaction costs and the clientele effect of taxes'.
In Chile, Maqueira and Guzman (1997) investigated a sample of shares traded in the Stock Exchange, concluding the ex dividend share behaviour is determined by tax factors rather than by abnormal returns, and supports the hypotheses of a clientele effect on the domestic market, which is induced by the tax structure that rules local investors.
1) One stream of this research examines post-dividend-change trading activity for evidence that the dividend clientele effect is strong enough to create shareholder clientele changes.
A further study of both insurers' dividend yield opportunities provides additional evidence supporting the notion that insurers apply portfolio strategies to achieve after-tax efficiency and that the tax-induced dividend clientele effect exists among insurers.
A clientele effect exists in the economy when investors in higher (lower) tax brackets buy stocks with low (high) dividend yields.
Section I discusses the clientele effect and cross-security market making in detail and outlines the testable hypotheses.
Gruber, 1970, "Marginal Stockholder Tax Rates and the Clientele Effect," Review of Economics and Statistics (February), 68-74.
It tests jointly the clientele effect and an after-tax version of the Black-Scholes option pricing formula.