Human Resource Disclosures in UK Corporate Annual Reports: To What Extent Do These Reflect Organisational Priorities Towards Labour?

Abstract

Our study analyses the nature, quality and extent of human resource disclosures (HRDs) of UK Financial Times Stock Exchange (FTSE) 100 firms by relying on a novel disclosure index measuring the depth and breadth of disclosures. Contextually, we focus on the 5-year period following the then Labour government's attempts to encourage firms to formally report on their human resource management practices and to foster deeper employer-employee engagement. First, we evaluate the degree to which companies report comprehensively (or substantively) on a number of HRD items that we classify as "procedural" or "sustainable." Second, we hypothesise that a company's employee relation ideology (using a proxy to measure a company's level of "unitarism") is positively associated with HRD. Our results indicate that: (i) whilst there has been an increase in the breadth of HRD in terms of procedural and sustainable items being disclosed, the evolution towards a more comprehensive and in-depth form of HRD remains rather limited; and (ii) there is a positive association between a company's employee relation ideology (unitarism) and the level of HRD. Theoretically, we conceive of HRD both as a reflection of an organisation's orientation towards a key stakeholder (unitarist relations with labour) and a legitimacy seeking exercise at a time of changing societal conditions. We contribute to the scant literature on the extent and determinants of HRD since prior research tends to subsume employee-related disclosures within the broader concept of social, ethical or intellectual capital disclosures. We also propose a disclosure checklist to underpin future HRD research.

Exploring the evolving motives underlying corporate social responsibility (CSR) disclosures in developing countries: the case of “political CSR” reporting

“…While organisational legitimacy remains a key lens in the study of CSR reporting (Khan et al , 2020), our contention is that there remains an insufficient articulation of the linkages between Suchman’s (1995) views on the “seeking” of legitimacy (i.e. organisation seeking to achieve a perceived congruence with the value system of a larger social system) and how/why do particular features of CSR reports contribute to the legitimation process and the types of legitimacy potentially being sought/achieved (Soobaroyen and Ntim, 2013; Vithana et al , 2019). In this respect, we argue that a combined theoretical framework can offer insights on the CSR reporting phenomenon, particularly when there are evolutions/changes to the value system(s) within the larger social system.…”

“…While there have been prior empirical analyses involving Suchman’s dynamics of legitimacy to interpret patterns or trends in CSR disclosures (e.g. Soobaroyen and Ntim, 2013; Vithana et al , 2019), there is relatively little work on appreciating the organisational/managerial rationales on the basis of primary data. Finally, and while acknowledging recent CSR reporting studies in the Egyptian context (Darrag and Crowther, 2017; El-Bassiouny and Letmathe, 2019), our empirical findings report on new insights borne out of the recent sociopolitical changes and the relevance of other non-instrumental motivations in explaining the emergence/prevalence of CSR reporting practices.…”

“…Second, and conceptually, we bring to the fore the implications of instrumental and political CSR (Scherer et al , 2016; Scherer, 2018) to the accounting literature and to the context of developing countries. For instance, and drawing upon Ashforth and Gibbs (1990), Kim et al (2007), Hrasky (2012), Soobaroyen and Ntim (2013), Chelli et al (2019) and Vithana et al (2019) articulated how (and why) CSR disclosures may reflect substantive features rather than symbolic ones as a means to align with specific pragmatic and/or moral forms of legitimacy. Distinctively, we emphasise how (and why) an organisational preference for a particular CSR reporting theme (and its related “audiences”) reflects the embedding (albeit partially) of a normative “political CSR” thinking aimed at enhancing moral legitimacy in the face of a changing political landscape associated with the role of the business sector in national development initiatives.…”

Human Capital resource as cost or investment: A market-based analysis

“…To test for firm level HC investment preference for the distribution of value in book value contribution (BVC), near-term earning contribution (NTC), and longer-term earning or terminal value contribution (TVC), we have divided all the variables in the right hand side of equation ( 2) by P t (Bushee, 2001) Since prior research suggests that the level of HCR investment could vary with firm size (SIZE), industry (IND), leverage (LEV), profitability (PRO), liquidity (LIQ), and employee productivity (EMPRO), which are likely to be correlated with the distribution of firm value, we have added these variables as control variables (Bushee, 2001;Chen et al, 2005;Samudhram et al, 2014;Vithana et al, 2021), as indicated below in equations ( 5) and ( 6). Abarbanell and Bernard (2000) originally captured the myopic pricing of stock using equation ( 7), which regresses actual share price against its constituent components: book value, forecasted near-term earnings, and forecasted longer-term earnings.…”

“…The value-added statement is a practical, effective, efficient, and reliable reporting instrument for integrated reporting, as it highlights the attribution of a firm's value to the main stakeholders contributing to it. (Haller et al, 2018;Vithana et al, 2021). The value added statement was instrumental in the development of the proposed measure, HCVA, which has been empirically tested in the current study.…”