A comparative analysis of human capital information opaqueness in South Korea and the UK

Abstract

PurposeHuman capital is considered by many to be a firm's most important asset. However, because no international human capital reporting framework exists, firms can decide to include/exclude human capital details on annual reports. Based on legitimacy theory, firms that disclose high levels of human capital information can be considered congruent with the expectations of society. However, firms can also choose to include human capital information on annual reports for symbolic purposes as an image management strategy.Design/methodology/approachUsing 2018 as a sample period, content analysis is used to evaluate the annual reports of the 25 largest British and 25 largest Korean firms to demonstrate the propensity of British/Korean firms to disclose human capital information as numerical and textual data.FindingsThe authors report that South Korean firms provide high levels of human capital information using narrative and numerical data, including value added human capital elements included on integrated reports. British firms on the other hand tend to use primarily positive narrative and limited numerical human capital data to present human capital information.Originality/valueThe results imply South Korean firms provide robust human capital information on annual reports as a legitimacy strategy. On the other hand, the UK's human capital reporting requirement can be considered as a form of image management. The results therefore have important policy implications for legislators, labour unions and firm stakeholders with incentives to enhance human capital information transparency.

Corporate governance and voluntary disclosure of sustainability performance: the case of Jordan

“…When the manager fails to act in the best interests of the shareholders, agency conflict will arise that results in market failure and a high level of information asymmetry. Therefore, better control and monitoring practices are needed to ensure that executive's effort is focused on maximizing the shareholders' wealth (Khatib et al 2021a), and meet the aspirations of the community (Lim and Mali 2021).…”

“…In the context of voluntary disclosure, good governance mechanisms are said to reduce information asymmetry as it requires firms to be more involved in sustainability issues that environmental, social, and governance (ESG) performance and disclose their contribution in this field, as many stakeholders look to the quality and value of the narrative information disclosed (Rowbottom and Lymer 2010). Many practices, such as the UK, refer to providing narrative disclosure in the first place in exchange for giving limited numerical information (Lim and Mali 2021). Hence, a governance system directs organizations to support confidence and transparency of the annual reports to meet various internal and external stakeholders and provide information according to their aspirations (OECD 2015).…”

An analysis of the effect of temporary/permanent contracts on firm efficiency performance: evidence from South Korea

“…However, as of this date, there is a knowledge gap regarding the type of information that would be useful to stakeholders. There are differing view regarding; (1) the arguments put forward by some in the accounting profession, inferring HC information should be presented as a numerical value on financial statements; (2) arguments put forward in industrial relation's literature, inferring the ability, skills and the knowledge of a firm's workforce adds value to business operations (Becker, 1975; Fitz-Enz, 2009); and (3) anthropocentric perspectives that infer firms have a responsibility to report HC information as an ethical consideration (Lim and Mali, 2021). Because of the conflicting views of stakeholders, as of this date, HC reporting is unstructured an opaque.…”

“…, 2018). Whilst NFR HC information is rare internationally, South Korean annual reports include unique NFR HC information such as temporary/permanent contract information (Lim and Mali, 2021) following government interventions (Hundt, 2015; Kim et al. , 2010; Kim and Rowley, 2006; Lee, 2005, 2015) and an impetus to enhance financial reporting quality (Choi et al.…”

“…, 2015; Fincham and Roslender, 2003; Li et al. , 2008; Lim and Mali, 2021; Striukova et al. , 2008; Roslender and Stevenson, 2009; Vandemaele et al.…”