اثرات عملکرد بازار سرمایه انسانی آشکار

This paper examines the market valuation and performance impacts of human capital-related information disclosures. Following a labor economics approach and using the annual reports of a sample of United States public companies, we construct human capital productivity and efficiency indicators and test for their informational content and value relevance following a portfolio performance approach. Results indicate that on average, firms with higher labor cost disclosures outperform their low labor cost counterparts. Estimated labor productivity and efficiency indicators also appear to be value-relevant since firms with higher value marginal products of labor, and higher marginal productivity relative to average labor costs, outperform their counterparts with lower values of both measures. We conclude that labor cost voluntary disclosures might be potentially useful in assessing human capital asset management and performance which could be relevant to market participants particularly for firms in knowledge-based industries.

Human capital information in North America is predominantly voluntarily disclosed, scarce, non-standardized and thus difficult to synthesize from annual reports. Further, and despite the evidence on the relevance of goodwill accounting disclosures in capturing a major part of a firm’s intellectual capital or intangible assets (e.g., Chauvin and Hirschey, 1994 and Hirschey and Richardson, 2002), accounting goodwill numbers remain aggregated figures encompassing several dimensions and facets of intellectual capital assets and particularly the externally generated ones following for example mergers and acquisitions corporate strategies. Thus, a more refined framework for identifying, measuring and assessing the performance of different intangible assets, and particularly internally-generated ones such as human capital and organizational capital is needed to single out its contribution to the value of the firm and to rationalize investment decisions in intangible resources both at the firm (managerial) and at the market (e.g., investor) levels. The general objective of this study is to further our understanding of the informational content and value of voluntarily disclosing labor and related costs by publicly traded firms, by examining investors’ perceived value of such disclosures. With the establishment of knowledge-based economies around the world, human capital asset management is increasingly becoming an important and critical aspect of business operational management and efficiency. In particular, human capital is increasingly viewed as a value driver asset in leading industries, such as the fast-growing high-technology sector and the financial services sector (Hayes and Schaefer, 1999, Murphy, 1985 and Lev, 2001). As a result, the accountancy profession has been under pressure from financial information users, such as investors and analysts, to provide transparent, concise, and comparable financial and other information disclosures regarding human capital-related accounting issues, such as executive and employee stock-based compensation and pension and post-retirement benefits data (e.g., Amir, 1996 and Aboody et al., 2004). Moreover, the financial reporting and accounting regulations of intangible assets, and particularly the more difficult types to measure such as human capital, have been the subject of ongoing debate and increasing research interest at the academic, professional and public policy levels (e.g., Chauvin and Hirschey, 1994, Skinner, 1996 and Rosett, 2001). This debate is further fuelled by the increasing discrepancy between accounting book values and the market values of most large public companies (i.e., the price-to-book ratio) where only about one third of the economic value of a firm as perceived by investors is recognized in its balance sheet. “Labor and related costs” is an accounting variable covering salaries, wages, pension costs, profit sharing and incentive compensation, as well as payroll taxes and other employee benefits (Compustat). A distinctive feature of this accounting variable in North America is that it is not mandatory to report on the firm’s annual report and is thus disclosed on a voluntary or discretionary basis. Being a fundamental part of a firm’s operating efficiency, labor and human capital information is increasingly sought in labor and capital markets (e.g., Aboody et al., 2004 and Lev, 2004). In practice, firms are competing more aggressively for human capital and are being innovative in deriving compensation packages and profit sharing formulae for their managers and employees. This represents a major departure from the neoclassical view of labor as a “passive” production input valued in fixed terms to a more dynamic and active approach based on human capital performance and contribution to firm wealth and value. On the other hand, and because human capital assets represent an important element of the broader set of firms’ intangible (or intellectual) asset base, it poses challenging dilemmas about the measurement, management, accounting reporting and market performance evaluation. Other intangible assets such as brand name capital and R&D expenditures frequently interfere with human and organizational capital making the task of identifying, measuring and reporting on intellectual capital assets and management value even more challenging. For example, a significant part of R&D expenditures in most large corporations is in the form of salaries, benefits and other employee compensation for its scientists which may be substantial especially if the scientists have specific and highly valuable skills and knowledge of the firm internal processes and innovative products. In this study, we explore the informational value of human capital indicators derived from labor cost accounting disclosures for a sample of US firms following a labor economics approach and a portfolio performance approach to examine investor-perceived benefits of labor costs voluntary disclosures. Following a production function approach and using the annual reports of a sample of US public companies we construct human capital productivity and efficiency indicators and test for their informational content and market value relevance. Results show that on average, firms with high labor costs disclosures performed relatively better than their “low labor costs” counterparts, and firms with higher value marginal products of labor (i.e., VMPL) and higher labor efficiency (i.e., the difference between VMPL and average labor costs or wages) outperform their counterparts with lower values of both measures. Our results generally lend support to the imperfect labor market hypothesis as explained in more detail in the subsequent sections of the paper, and thus suggest that potential valuation benefits could be gained from voluntarily disclosing human capital management and performance indicators in the future. The remainder of this paper is organized as follows: Section 2 briefly describes the regulatory framework for labor cost disclosures in North America and reviews prior related research. The third section sets out the research hypotheses and design, while Section 4 presents and discusses the empirical results. The final section summarizes and concludes the paper with some implications of the results and suggestions for future research.

Human capital is a fundamental element of the broader set of intellectual or intangible capital. Therefore, problems associated with the measurement, management and reporting of intangible assets and/or goodwill characterize this asset (e.g., Lev, 2004 and Chauvin and Hirschey, 1994). Furthermore, controversies regarding how to account for human capital assets and related issues (e.g., expensing versus capitalizing), recognition versus disclosure, and amortization are still being debated in the accounting academic and regulatory circles and remain largely unresolved (e.g., Aboody et al., 2004 and AICPA, 1994). Although previous research has established the usefulness and market value relevance of goodwill accounting information such as advertising and R&D expenditures (e.g., Chauvin and Hirschey, 1994 and Hirschey and Richardson, 2002), internally generated intangible capital (or goodwill) has been hard to measure, report and therefore more difficult to manage internally at the firm level and to value externally at the market level. This situation has been exacerbated by the incompleteness, scarcity or unavailability, and non-uniformity of human capital related disclosures (such as employee training and other expenditures) in the North-American corporate and regulatory contexts. In this study, we examine the market performance effects of human capital disclosures and provide some evidence for a positive influence of human capital information on the firm’s market value and performance, thus potentially supporting an imperfectly competitive labor market hypothesis. Following a financial economics approach and prior research, we define firm performance in the market as the firm’s ability to generate above normal (or excess) returns (e.g., Fama and French, 1995, Hansson, 1997 and Otten and Bams, 2004). Several portfolios sorted by size, labor cost disclosure status, and human capital indicators are formed annually and their performance measured using the risk-adjusted measures for portfolio (or fund) performance evaluation, namely Jensen’s and Treynor’s indices. Our study extends prior related literature in accounting and financial economics in two ways; we examine the market valuation and performance effects of labor cost voluntary disclosures using a portfolio performance approach while related voluntary disclosure valuation studies have focused on accounting valuation models (e.g., Aboody et al., 2004 and Ballester et al., 2002). Further, we use production and labor economics to derive human capital indicators (such as marginal product of labor and labor efficiency indicators) besides the readily available labor cost related accounting variables and incorporate those measures in the portfolio performance analysis. The results show that higher levels of human capital as captured by total labor expenditures; workforce productivity and human capital management efficiency (i.e., LEI variable) are generally associated with higher abnormal returns. The results are consistent with our research hypotheses according to which firms with higher human capital performance indicators are associated with higher portfolio performance compared to their peers with lower levels of human capital. The portfolio performance results are consistent across both measures (i.e., Treynor’s and Jensen’s) and generally across time (short-term to longer-term returns) with some noticeable convergence in the longer term time horizon (five-year returns). The results also indicate that the interaction of firm size and human capital variables is important to consider. Particularly, the market (or investors) appear less capable of distinguishing between labor costs (or expenditures) and returns form human capital investments which is illustrated by the portfolio performance results when we consider combinations of size and labor costs on one hand and size and labor efficiency (or returns from human capital) on the other hand. For instance, results show that large firms with lower labor efficiency measures outperform their peers with higher levels of labor efficiency. The effect of size and its interaction with human capital is a worthy subject for future research. From a public policy perspective, the results of this study leave open some of the controversial questions faced by standard setters and regulators in North America regarding the disclosure of human capital data. Although our results suggest that disclosure per se does not seem to greatly affect firm market performance, we also find that the market seems to recognize and reward the net gains from investing in human capital assets particularly for small and medium size businesses. The findings might have important policy implications in that if markets are nearly as efficient as they seem to be, and the signaling mechanism works effectively (e.g., it would be costly for lower quality management to disclose adverse human capital performance measures with regard to their peers’) higher quality management (firms) would be able to differentiate themselves from lower quality peers and the disclosure of human capital data could remain voluntary to a large extent.