How should (a) Signaling and (b) The clientele effect be taken into account by a firm as

Question:

How should
(a) Signaling and
(b) The be taken into account by a firm as it considers its decision? Do signaling and clientele effects make it easier or harder to determine if investors prefer high or low payout ratios? Do these factors influence the desirability of a stable policy versus one that is flexible and thus varies with the company’s cash flows and investment opportunities?

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... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...