Dividend clientele

Dividend clientele

A group of shareholders who prefer that the firm follow a particular dividend policy. Such a preference may be based on comparable tax situations.

Dividend Clientele

Shareholders who pressure a publicly-traded company to follow a certain dividend policy, usually in order to minimize their own tax liability. Often, the dividend clientele asks the company to change the schedule of dividend payments to that which is most favorable to them. However, these policies are not always in the best long-term interests of the company.
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Taxes and dividend clientele: evidence from trading and ownership structure.
After four decades, the main theoretical issues regarding DP have focused upon the optimal DP for a firm, the market response to the firms' dividend decisions, the dividend signaling hypothesis, the dividend clientele effect, taxation issues associated with dividends versus capital gains, importance of agency costs, lifecycle theory of dividend, and determinants of DP.
Some direct evidence on the dividend clientele phenomenon.
Prediction 21 is based on the existence of static dividend clienteles, so I start by reviewing dividend clientele research.
Theory suggests several possible reasons for these positive abnormal returns, these include: reduction of free cash flow or debt capacity, signaling of management's optimism, distribution of tax preferred income, and dividend clientele effect.
Bali and Hite (1998, 155) do not rule out the existence of dividend clienteles, but suggest that the "Elton and Gruber (1970) findings cannot be interpreted as incontrovertible evidence that such clienteles exist." Consistent with a dividend clientele existing, Bajaj and Vijh (19 90) and Denis et al.
There is a geographically varying dividend clientele effect consistent with the variations in risk aversion among different cultural groups.
Schlarbaum (1978), 'Some direct evidence on the dividend clientele hypothesis'.
After controlling for regulation, liquidity, and risk effects, test results show that each group of insurers forms a distinct tax-induced dividend clientele.
Thus, their study provides economic reasoning and empirical evidence for a specific type of "dividend clientele" as originally suggested by Miller and Modigliani (1961).
Any dividend clientele effect among institutional investors is weaker now than it was before the PI standard emerged in the early 1990s.