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Why do the clientele effect and the information contenthypotheses imply that investors prefer stable dividends?

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter12: Valuation: Cash-flow Based Approaches

Section: Chapter Questions

Problem 3QE

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According to the clientele effect, which (potential) investors might be attracted by high dividend distribution policy? Name one specific group of people and explain your argument.
How does the market react to unexpected dividend changes? What does this tell us about dividendpolicy? How is it possible that dividends are so important, but at the same time, dividend policy isirrelevant?
which one is correct please confirm? QUESTION 29 The dividend ____ states that investors will tend to be attracted to firms that have dividend policies consistent with the investor's objectives. a. "informational content" b. passive residual theory c. "clientele effect" d. signal
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Why does behavioral finance considered investors as "normal" yet biased and errors? Support being subject to decision-making
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