The Clientele Effect Implies That Firms Must Be Sensitive to Their

question 166

True/False

The clientele effect implies that firms must be sensitive to their investor clientele by avoiding changes to the dividend policy that attracted those investors.

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Definitions:

Negative Reinforcement

A behavioral principle where the removal of an unpleasant stimulus strengthens a behavior or increases the likelihood of its repetition.

Unpleasant Stimulus

A negative or harmful stimulus that causes discomfort or aversion, often used in psychology to study learning, memory, and behavior conditioning.

Desired Behavior

A specific pattern of action that an individual or group aims to achieve or exhibit.

Nature

The processes within an organism that guide that organism to develop according to its genetic code.