Agency Costs and Firms Performance of Listed Construction and Real Estate Companies in Nigeria

This study examined the influence of agency costs on firms’ performance of listed construction and real estate companies in Nigeria. The correlation research design was adopted for this study. The eight (8) construction and real estate companies listed on the Nigeria Exchange Group as at June 2024 constitutes the population for this study. The study employed panel secondary data which were sourced from annual report and accounts of the sample companies for the periods of 20142023 accounting years. Pooled ordinary least square (POLS) regression analysis was used to link the relationship between agency costs and firms’ performance. The results of the multiple regression revealed that there is positive significant relationship between free cash flow and return on assets of listed construction and real estate companies in Nigeria. The study found that there is positive significant relationship between asset utilization and return on assets of listed construction and real estate companies in Nigeria. Furthermore, the study showed that there is a positive link between the sales, general and administrative expenses and the return on assets of listed construction and real estate companies in Nigeria during the period under review. The study therefore recommended that regulatory bodies should encourage firms to allocate FCF towards high-return investments, such as R&D or strategic acquisitions, which directly improve ROA. Governments should offer tax benefits for firms that use a substantial portion of their FCF for reinvestment into productive assets, encouraging companies to enhance their asset base and operational performance.