Which of the following statements is FALSE? Differences in investors tax preferences can create clientele effects, in which the dividend policy of a firm can be optimized for the tax preferences of its investor clientele. Individuals in the highest tax brackets have a preference for stocks that pay high dividends, whereas tax- free investors and corporations have a preference for stocks with no or low dividends. The dividend-capture theory states that absent transaction costs, investors can trade shares at the time of the dividend so that non-taxed investors receive the dividend. For the majority of the past 50 years, the maximum tax rate on dividends has been set higher than the tax rate on long-term capital gains