What Is Clientele Effect?
Clientele effect explains the movement in a company's stock price according to the demands and goals of its investors. These investor demands come in reaction to a tax, dividend or other policy change which affects the shares.
The clientele effect first assumes that specific investors are preliminarily attracted to different company policies, and when a company's policy alters, they will adjust their stock holdings accordingly. As a result of this adjustment, stock prices may fluctuate.
How Clientele Effect Works
The most prudent way to explain the clientele effect is by describing how this phenomenon triggers investors' reactions. Public equities are typically categorized either as dividend-paying securities, high-growth stocks, blue-chip stocks or mature stocks. Each of these categories links to a specific age