Human Capital Disclosure

Human capital is a primary source of value in modern firms, yet little is known about what employee information firms disclose and whether it is timely and informative given the SEC's flexible disclosure rules. We examine the determinants of firms' human capital disclosures by combining textual analysis of disclosures via natural language processing with a proprietary dataset on 45 million individual career histories. We show that human capital disclosure is greater when market demand for disclosure is likely to be higher. Contrary to proprietary costs theories of disclosure, firms in competitive environments disclose more. Human capital disclosures also respond to changes in the underlying stock and flow of employees. Two SEC rule changes that encourage but do not require specific human capital information elicit greater disclosures, especially from firms that previously under-disclosed workforce information