Financial reporting and decision making at Lake Victoria Hotel

Abstract

The study was to establish the relationship between financial reporting and decision making at Lake Victoria Hotel. The study was underpinned by the decision theory and agency theory. The objectives were to find out the relationship between reliability of financial reports and decision making, to find out the relationship between timeliness of financial reports and decision making and, to find out the relationship between understandability of financial reports and decision making. The study took on the cross sectional case study design where both qualitative and quantitative methods approach were used to collect and analyze data. The targeted study population was 43 out of which a sample of 41 was selected using purposive and census techniques. A total of 38 responses were got (92.7% response rate). Data was collected using the questionnaires, interview guide and analyzed using Statistical Package for Social Scientists (SPSS) and content and thematic analysis for quantitative and qualitative data respectively. The findings revealed that there is a significant relationship between timeliness of financial reports and decision making, and a strong significant relationship between understandability and decision making at Lake Victoria Hotel. The study however revealed that there is an insignificant relationship between reliability of financial reports and decision making. The study concluded that timeliness and understandability of financial reports have a direct linkage with decision making at the hotel. The study recommends that for the hotel to improve in decision making there is need to have timely and understandable financial reports. The study further recommends that the managers of LVH should be trained to acquire necessary skills to help understand the financial reports so they make informed decisions.