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.

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