JMGT_V2_N2_RP2 Mondher Bouattour Journal on Management 2230 – 715X 2 2 34 41 Dividend increase, signaling, overinvestment, dividend clientele This paper discusses about the information content of dividend increases announcements through the French Market. Cross-sectional regressions provide support for the signaling and free cash flow hypothesis, but only weak support for dividend clientele explanation. Cumulative abnormal returns are found to be positively related to the standardized dividend change and negatively related to firm size. These findings confirm the signaling hypothesis. Consistent with the free cash flow theory, growth opportunities and available funds influences announcement period excess returns. However, market reaction to dividend increases announcement is found to be unrelated to the dividend yield, a finding that is inconsistent with the dividend clientele explanation. September - November 2007 Copyright © 2007 i-manager publications. All rights reserved. i-manager Publications http://www.imanagerpublications.com/Article.aspx?ArticleId=350