Human capital disclosures in developing countries: Figureheads and value creators
Huang, C. , Luther, R. , Tayles, M. and Haniffa, R. (2013) Human capital disclosures in developing countries: Figureheads and value creators. To be published in Journal of Applied Accounting Research, 14 (2). ISSN 0967-5426 [In Press]
Publisher's URL: http://www.emeraldinsight.com/journals.htm?issn=09...
Purpose - Purpose To explore if any disparity exists between human capital information desired by financial analysts and fund managers and actual disclosure of such information in company annual reports in the context of developing countries. Design/methodology/approach - Methodology Financial analysts and fund managers were interviewed to obtain opinions on the importance attributed to human capital information and whether their desired information is disclosed in the annual reports. Content analysis was then used to assess the extent and nature of human capital information actually provided in the annual reports of 100 listed companies in Malaysia. Findings - Findings Interviewees seek information on company management and key corporate decision makers who could provide a firm with competitive advantage. However, the human capital information provided is limited, and tends to focus on directors, many of whom may be figureheads with little impact on the way companies are run and in creating value for the firm. Accordingly, analysts rely on alternative sources to get their desired information – a costly process for private shareholders. Originality/value - Value The paper contributes to the literature on the demand for, and disclosure of, human capital information in the context of developing countries. It identifies the inadequacy of current human capital disclosure practices in company annual reports. We theorise that in developing countries, resource dependence, legitimacy-seeking and ‘culture’ causes companies to pay relatively more attention to figureheads than value creators.
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