The observed empirical fact that stocks attract particular investors based on the firm's dividend policy and the resulting tax impact on investors is called the _________________.

A) Information content effect.
B) Clientele effect.
C) Efficient Markets Hypothesis.
D) M&M Proposition I.
E) M&M Proposition II.

Clientele Effect

A theory suggesting that the stock price movements of a company are influenced by the tax preferences and dividend policies preferred by its current shareholders.

Information Content Effect

The impact of news announcements on stock prices, reflecting changes in investor perceptions.

Efficient Markets Hypothesis

The theory that financial markets are "efficient" in reflecting information about the prices of securities, meaning that existing share prices always incorporate and reflect all relevant information.