If the clientele effect holds, then financial managers cannot increase the demand (and therefore the market value) of their firms' shares by increasing the rate of dividend payout.

The clientele effect suggests that investors are attracted to companies whose dividend payout policies match their preference. Therefore, changing the dividend payout rate to attract a different group of investors (and thus potentially increase demand for the shares) may not be effective, as it could alienate the existing clientele without necessarily attracting a new one.