Human Capital Information Disclosure in the North-American Financial Services Industry

Despite a general consensus that human resources are highly valuable to modern organizations, accounting and financial reporting of human capital-related data remains scarce, fragmented, and lacking a systematic and uniform reporting framework. Moreover, the impact of human resource management and investments in human capital on firm performance continues to be a hotly debated issue by management scholars and practitioners requiring further empirical testing with potentially important organizational and policy implications. This paper contributes to the growing literature in strategic human capital and its reporting by examining human resource disclosures in the financial services sector in North America. Results indicate that labor costs and marginal productivity are significantly associated with human resource disclosures but only labor costs are significantly related to firm financial performance. More interestingly, these findings show opposite (or inverted) effects between the US and Canadian samples. Overall, the findings suggest that human capital information may be relevant to market participants and that labor market conditions and human capital attributes could have a significant impact on value or rent appropriation between employers and employees.