| dc.description.abstract | Supermarkets serve as a vital link between producers and consumers, ensuring the efficient
distribution of a wide range of goods and services across the country. Despite the critical
importance of the supermarket industry, large supermarket chains in Nairobi City County have
been grappling with significant financial stability challenges. The study aimed to determine the
effect of selected firm characteristics on financial distress of large supermarkets in Nairobi City
County. The specific objectives include; to establish the effect of firm size on financial distress
of large supermarkets in Nairobi City County. To determine the effect of leverage on financial
distress of large supermarkets in Nairobi City County. To examine the effect of liquidity on
financial distress of large supermarkets in Nairobi City County. The study was informed by
three theories that include; signaling theory, agency theory and the liquidity preference theory.
The study used explanatory research design. The study focused on seven large supermarkets
that include Naivas, QuickMart, Cleanshelf, Eastmatt, Carrefour, Mathai Supermarket and
Chandarana Foodplus financial records for a period of 7 years (2017-2023) were obtained from
the websites of the seven supermarkets and their annual reports, which are maintained by the
Retail Trade Association of Kenya (RETRAK). The study collected secondary panel data from
2017-2023 for 7 large supermarkets in Nairobi using a data collection checklist. It analyzed the
data using descriptive statistics and panel regression to examine the effects of firm size,
leverage, and liquidity on financial distress. Diagnostic tests like multicollinearity, normality,
heteroscedasticity, stationarity, autocorrelation, and Hausman test were conducted. The
findings were presented using tables and discussed in light of existing literature, highlighting
implications for theory and practice. The study found that firm size had a moderate negative
correlation (r=-0.440, p=0.002) with financial distress. The panel regression analysis also
found that firm size had a significant negative effect (β=-1.3214, p=0.015) on financial distress
of large supermarkets in Nairobi City County. The study also found that leverage had a
moderate positive correlation (r=0.377, p=0.008) with financial distress. The panel regression
results further showed that leverage had a significant positive effect (β=0.6206, p=0.035) on
financial distress of large supermarkets. The study also found that liquidity had a strong
negative correlation (r=-0.512, p=0.000) with financial distress. The panel regression analysis
additionally revealed that liquidity had a significant negative effect (β=-2.7411, p=0.000) on
financial distress of large supermarkets in Nairobi City County. The study concluded that firm
size has a negative and significant effect on financial distress among large supermarkets in
Nairobi City County, implying that larger supermarkets are less likely to experience financial
distress. Leverage was found to have a positive and significant effect on financial distress,
suggesting that highly leveraged supermarkets are more susceptible to financial challenges.
Liquidity was shown to have a negative and significant effect on financial distress, indicating
that supermarkets with strong liquidity positions are better equipped to handle unexpected
financial hurdles. These study shows the crucial role of effective financial management in
promoting the stability and long-term sustainability of the supermarket sector in Nairobi City
County. | en_US |
