Perceptions of Human Capital Measures: From Corporate Executives and Investors

Abstract

This study compared the perceptions of executives and investors in terms of the importance to disclose human capital measures and their knowledge of those measures. Forty-nine senior-level executives (41% response rate) from service-oriented, public-listed companies in Australia and 33 investors (47% response rate) from various fund management companies responded to our survey. The investors indicated the importance to disclose certain human capital measures more than the executives. The executives appeared to show a better understanding than the investors on indicators such as staff satisfaction index, staff capacity, motivational index, workforce stability, and workforce competence profile. To date, researchers have explored human capital from a piecemeal perspective. A more integrated and multifaceted measure of human capital has the potential to benefit fund managers and executives. Disclosure of value added by employees, composition of staff (full-time, contract, or temporary), staff turnover, average years of experience, and average age of management and operational staff would shed some light on investment decisions for fund managers. Executives could utilize the measures to reflect on an assortment of human capital issues that are relevant to their organizations and stakeholders, especially the investment community. This study proposed a more inclusive measure of human capital by integrating traditional measures of human capital and non-accounting measures (e.g., educational level, experience, and motivation). A comparison of the perspectives of executives and investors revealed preferences for certain information, which can help to improve the perception of transparency and accountability.