Human capital disclosure, accounting numbers, and share price

Abstract

Purpose – This paper aims to show the associations between the amount of voluntary human capital (HC) disclosures and company profiles, including required HC and accounting information to verify a disclosure theory that consolidates four traditional theories. It also verifies the previously found association between voluntary HC information and share price. Design/methodology/approach – This research uses regression analysis and graphical modelling of a stratified random sample from the Tokyo Stock Exchange. Text mining software is used for content analysis of annual reports to quantify the amount of qualitative HC information. Findings – This study finds associations between the amount of voluntary HC information and the number of employees and the average salary. In particular, information about competence/qualification and personnel are related. Research limitations/implications – The results provide some support for the consolidated theory and are presumably consistent with the signalling theory and stakeholder theory in terms of the labour market rather than the financial market. Originality/value – By using both regression analysis and, graphical modelling this study shows the difference between the outputs of Germany and Japan and how HC characteristics of a firm relate to its disclosure behaviour, revealing hidden aspects that traditional prior studies have ignored.