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Operational Cost Efficiency and Earnings Performance in Nigerian Construction and Real Estate Firms: Policy Implications

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  • August 12, 2026
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Ojeh Augustine, Ph.D., FCA 1, Onah, Kelvin Amobi, Ph.D., CNA 2, Ani, Samuel Uchezuike Ph.D.3   &  Nkwo, Festus Ndubuisi4

Abstract         

This study investigates the effect of operational cost efficiency on the earnings performance of Nigerian construction and real estate firms between 2014 and 2024, with Earnings Performance (EP) serving as the measure of profitability. The specific objective was to assess how Operating Expense Ratio (OER), Cost of Sales Ratio (CSR), Administrative Expense Ratio (AER), Depreciation to Asset Ratio (DAR), and Overhead to Revenue Ratio (ORR) influence EP. Using panel data obtained from five listed construction and real estate firms, Julius Berger Nigeria Plc, Costain West Africa Plc, Cappa and D’Alberto Plc, Redstar Express Plc, and UPDC Real Estate Investment Trust and employing panel least squares regression analysis, the study found that only two of the five ratios had a statistically significant impact on earnings performance. Operating Expense Ratio (β = -0.6647, p = 0.0000) and Administrative Expense Ratio (β = -0.4001, p = 0.0086) exhibited significant negative effects, suggesting that higher costs in these areas are associated with reduced profitability. In contrast, Cost of Sales Ratio (β = -0.0562, p = 0.3154), Depreciation to Asset Ratio (β = -0.0019, p = 0.9859), and Overhead to Revenue Ratio (β = -0.0395, p = 0.7555) showed statistically insignificant relationships with EP. Descriptive statistics revealed moderate variability in operational cost components and earnings performance across the sampled firms, highlighting operational and financial diversity within the sector. The findings suggest that effective cost management, particularly in operating and administrative expenses, is critical for enhancing profitability, and that internal cost controls should be complemented by broader strategic and operational considerations. It is concluded that while operational cost efficiency significantly affects earnings, construction and real estate firms should adopt integrated performance strategies that consider both internal metrics and external industry challenges to sustain profitability.

Keywords: Earnings Performance, Operating Expense Ratio, Cost of Sales Ratio, Administrative Expense Ratio, Depreciation to Asset Ratio, Overhead to Revenue Ratio, Operational Cost Efficiency, Profitability.Cite: Ojeh, A.,  Onah, K. A., Ani, S. U. &  Nkwo, F. N. (2026). Operational Cost Efficiency and Earnings Performance in Nigerian Construction and Real Estate Firms: Policy Implications. International Journal of Accounting, Marketing and Analytics,4 (3), 64-82. https://doi.org/10.5281/zenodo.21910245

IJAMA_43, 64-82Download
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