Voluntary Disclosure of Human Capital : Evidence from India

Human capital has emerged as an important source of sustainable competitive advantage in the knowledge-based economy. However, due to the dominance of financial and accounting conventions, corporate public reporting is limited in capturing information on human capital. The objective of the present study is to investigate the human capital disclosure phenomenon in the case of Indian firms with specific reference to Nifty 50 companies. Based on the findings of the study, 11 distinct themes related to the human capital disclosure practices of Indian companies have emerged. Among those themes, 'employee compensation and benefit' is found to be the most reported content of human capital disclosure, followed by 'training and development', while 'work place safety initiative' is found to be the least reported content of human capital disclosure. The analysis of Human Capital Disclosure Index (HCDI) score of the Nifty companies revealed that computer and software industry has the highest average HCDI score, followed by banks and pharmaceutical industry. The study observed a wide discrepancy in human capital disclosure practices based on the industry-level data. The findings also reveal that 'employee expense as a proportion of its total operating expense' has a significant positive impact on HCDI. Also, there is no significant impact of human capital disclosure on the market value of the companies. The implications of the study for practitioners and policy makers are also discussed