Human Capital -Explanations for voluntary disclosure of human capital in annual reports
Abstract
Background: Nowadays, many corporations claim that their employees are the company’s most
valuable resource. Therefore, it may seem odd that most companies choose not to disclose much
voluntary information concerning human capital in their annual reports, even though most agree
that their employees contribute to the company’s competitive advantage. Especially knowledgebased
companies, whose core assets are not shown on the balance sheet, are expected to have
incentives for wanting to disclose information concerning human capital in their annual reports.
Purpose: The purpose of this study is to identify and discuss the explanations behind why
knowledge-based companies, with focus on three well-known Swedish auditing firms, choose to
disclose voluntary information on human capital in their annual reports of 2010/2011, and to see
if the explanations vary with company size.
Methodology: This bachelor thesis has been conducted as a comparative case study of one
relatively smaller and two relatively larger companies in the auditing industry. The case study has
been qualitative and the empirical findings have been collected through semi-structured
interviews with the participating companies.
Findings: We find that auditing firms provide several explanations for their human capital
disclosure. All of the companies claim that one explanation for this disclosure is that it enables
them to show that their employees are such an important resource for the business and for the
company’s survival. They also explain that human capital disclosure enables them to show their
employees that the company cares about them. Further, they explain that human capital
disclosure increases their trustworthiness. From these explanations, we can see that all of the
companies address their human capital information to different stakeholders. Moreover, we find
that the companies’ explanations do not vary with company size.
Suggestions to future studies: Future studies could choose to repeat this study but focus on
another knowledge-intensive industry, and the results could then be compared to those of this
bachelor thesis. It could also be interesting to do a comparative study between auditing firms in
different countries on why they disclose voluntary information on human capital.
Degree
Student essay
View/ Open
Date
2012-06-13Author
Johansson, Hanna
Karlsson, Sofie
Keywords
Human capital, voluntary disclosure, annual report disclosure, auditing firms,
Series/Report no.
Externredovisning
11-12-50
Language
eng