HRA Disclosure –an international study

Abstract: Purpose - Since human resources play a significant role in the financial prosperity of companies andare of great importance to decision makers in today’s knowledge-based economy, this study aims toexplore the extent of Human Resource Accounting (HRA) disclosure in companies’ annual reports ona global scale. The purpose of this study is to also examine how various corporate characteristicsaffect the extent of HRA disclosure in companies’ annual reports around the world so thatpolicymakers can study the pattern and devise a comprehensive set of guidelines for standardizing theprocedure of disclosing information regarding human resources of companies. Design/methodology/approach - This study adopted a quantitative analysis approach. The sampleconsists of 375 companies whose annual reports for the year ended 2020 have been collected fromrespective company websites for analysis. A disclosure checklist consisting of 30 items related tohuman resources have been used to determine the Human Resource Accounting Disclosure Index(HRADI) score of each of the sample companies. Five hypotheses involving the five independentvariables of firm size, type of industry, number of hours of employee training and development,number of employees, and return on investment made on employees have been tested using a multipleregression model to examine their individual relationships with the dependent variable, i.e. HRADIscore. Findings - The findings reveal that both firm size and return on investment made on employees havestatistically significant negative relationships with HRADI score. Meanwhile, type of industry,number of hours of employee training and development, and number of employees do not have anystatistically significant relationship with HRADI score. Research limitations/implications - The number of hours of employee training and developmentneeded to be computed manually for some companies. Future research could consider better trainingand development parameters whose information is readily available. The sample size could also bebroadened using a wider range of independent variables in the multiple regression model for moreaccurate results in future studies. Practical implications - Policymakers can make use of this paper’s findings to build a comprehensiveframework guiding companies across the world to disclose information about their human resourcesin a certain format for better comparability and transparency of information. Originality/value - This study covers a wider range of countries in its sample with the aim to exploreinternational trends of HRA disclosure. The disclosure checklist has four unique disclosure items andthe independent variables in the multiple regression analysis have not been used in such a broadinternational setting previously. Keywords - human resource accounting, HRA disclosure, HRADI score, HRA disclosure checklist,human resources, corporate characteristics Paper type - Research paper