Impact of corporate characteristics on human resource disclosures

Abstract

Purpose Human resource (HR) disclosures are voluntary in nature in most countries including India. The voluntary nature of HR disclosures results in discrepancy in the HR disclosure practices across companies and industries. The purpose of this paper is to examine the extent of HR disclosures in annual reports of Indian listed companies and to identify their determinants in a three stage analysis. Design/methodology/approach In the first stage a 16 item human resource disclosure index (HRDI) has been constructed for the set of CNX 200 companies listed on National Stock Exchange. Thereafter the effect of various independent variables on HRDI is analysed descriptively. Finally in the third stage HRDI has been regressed against the independent variables using regression analysis technique to identify key determinants of HRDI. Findings The research reveals that there is high variation among sample companies as regard HRDI. The results of descriptive analysis, correlation analysis and multivariate regression analysis establish that government’s participation in ownership and market capitalisation has positive significant effect on HRDI at 1 per cent, presence of separate HR directors committee, presence of more independent directors on board at 5 per cent and cross-list America and profit after tax at 10 per cent level. Implicitly HRDI is positively affected by size of company as measured by market capitalisation. Though contrary to expectations, other variables leverage, number of employees, assets, ownership concentration, type of auditor, age, complexity of business structure, employee expense to total operating expense ratio, industry affiliation, foreign investment and proportion of non-executive directors on board are found to have moderate though insignificant influence on HRDI. Research limitations/implications Cross-sectional design, dependence on annual reports as a primary document for disclosure and subjectivity in HRDI construction are the main limitations of the research. A longitudinal study may be carried to study the pattern of HR disclosures in future. Weighted ranking of different items of disclosures may be studied to improve the understanding of extent of disclosures. Practical implications The HRDI as constructed in the research may be used as a benchmark by companies to improve their HR disclosures. It can also be used by accounting bodies and company regulators while deciding about standards regarding HR disclosures. Investors can also use HR disclosures made by a company as a basis to understand its financial standing and future potentials. Originality/value The study adds to the existing literature by developing 16 item HRDI to measure the extent of disclosures by listed companies in India and thereafter by including some new propositions in the determinants of HRDI have never been tested in the existing studies. These propositions are government’s participation in ownership, separate HR committee of directors, board composition and foreign activity. These propositions have been empirically validated in this research except for foreign activity.

Human Resource Disclosures in Corporate Annual Reports of Insurance Companies: A Case of Developing Country

“…Furthermore, according to human resources literature, better human resources management also create positive effect on the companies' financial performance by reducing cost, enhancing human resources productivity and creating a competitive advantage [33,60]. In addition, that the management of companies with a great economic performance disclose more detailed information to sustain its own position and compensation and show a greater willingness to disclosure [28,43]. For that reason, we proposed our hypothesis as: Hypothesis 1 (H1).…”

“…Table 1 represents the recent studies about human resource disclosures in corporate reports. Kaur [28] analyzed the extent of HR disclosures of CNX (Indian Stock Exchange Index) 200 firms listed on National Stock Exchange in India. He used HR disclosure item as employee strength, attrition/turnover rate, training and development, staff distribution, employee experience, employee age and employee education, employee performance indicators, employee participation, presence of HR department, human resources awards, employee satisfaction survey" retirement, whistleblowing policy, EVA (economic value added) disclosure, health, safety and welfare of employees and labor relations.…”

“…Content analysis method was used in the study consistent with other similar studies [28,[33][34][35]. The method enables to classify the information disclosed into several categories of items which involve the aspects of human resources disclosure [34] and helps researcher to test theoretical issues to improve understanding of the data [36].…”

“…The relationship between leverage and firm disclosure level are subjected to empirical researches. However, the results are dubious [51], some of the studies propound significant relationship [63][64][65], while others suggest insignificant relationship [28,66,67]. Hence, the third hypothesis is proposed as: Hypothesis 3 (H3).…”

“…In addition, that the larger companies are in the spotlight of the government agencies and society. For that reason, better disclosure practices could be a way for companies to diminish the pressure [28]. There are number of empirical researches that examine the effect of size on human resources disclosure [3,28,30,63,65,68].…”