Search

Financial decisions ensure that supermarket managers invest in viable projects, stipulate optimum capital structure and adequately compensate shareholders. For the last two decades, large-scale retail stores have been facing poor financial performance leading to the closure of some of their branches. This study aimed at assessing the effect of financial decisions on the profitability of large-scale retail supermarkets in Kenya. The specific objective of the study was to examine the effects of dividend decisions on the profitability of large-scale retail stores in Kenya. The study was guided by pecking order theory. The target population was nine largescale retail supermarkets in Kenya. Census sampling technique was adopted therefore all the large-scale retail supermarkets were used in the study. Data was collected from audited financial statements. Panel Data was analyzed using descriptive and inferential statistics. Descriptive statistics comprised of mean, minimum value, maximum value, and standard deviation. Inferential statistics consisted of random effects model. Positive and statistically significant effect was found to exist between dividend decisions and profitability; this was supported by regression coefficient of 0.4180 and p-value of 0.016 less than 0.05 level of significant. The study therefore concluded that increased retained earnings would lead to improved profitability. The study recommends that the management of large-scale retail supermarkets should formulate ideal dividend policies that will properly compensate shareholders while ploughing back enough profits for future investments.