Human capital resource as cost or investment: a market-based analysis
Human capital resource as cost or investment: a market-based analysis
This study empirically investigates the myopic behavior of the stock market toward firms’ human capital resource investment, paying particular attention to two key proxies: human resource expenditure and the firm value added allocated to the employees. Focusing on human capital resource investment decisions’ alignment with near versus longer-term emphasis by investors, we examine firms listed in the Financial Times Stock Exchange (FTSE) 100 over a five-year period using an established accounting-based valuation model. Our results show that human capital investment discourse leads to overweighting of the forecasted longer-term earnings in the apportionment of share price constituents, suggesting that investors consider investment in employees to generate more return in the longer-term. Additionally, our findings prove that investors respond to firm level human capital resource as an investment generating more return in the longer-term. This emphasises the importance of communicating human capital resource investment information that accurately reflects the firm value creation via employees in external financial reporting.
FTSE 100, human capital resource, human resource expenditure, market myopia, value added
Vithana, Krishanthi
f6916e65-2c61-43ab-8ce3-897a2f8b6591
Jayasekera, R
1e03402f-3787-43d2-8154-21a5b5a1ab2c
Choudhry, Taufiq
6fc3ceb8-8103-4017-b3b5-2d38efa57728
Baruch, Yehuda
25b89777-def4-4958-afdc-0ceab43efe8a
13 October 2021
Vithana, Krishanthi
f6916e65-2c61-43ab-8ce3-897a2f8b6591
Jayasekera, R
1e03402f-3787-43d2-8154-21a5b5a1ab2c
Choudhry, Taufiq
6fc3ceb8-8103-4017-b3b5-2d38efa57728
Baruch, Yehuda
25b89777-def4-4958-afdc-0ceab43efe8a
Vithana, Krishanthi, Jayasekera, R, Choudhry, Taufiq and Baruch, Yehuda
(2021)
Human capital resource as cost or investment: a market-based analysis.
The International Journal of Human Resource Management.
(doi:10.1080/09585192.2021.1986106).
Abstract
This study empirically investigates the myopic behavior of the stock market toward firms’ human capital resource investment, paying particular attention to two key proxies: human resource expenditure and the firm value added allocated to the employees. Focusing on human capital resource investment decisions’ alignment with near versus longer-term emphasis by investors, we examine firms listed in the Financial Times Stock Exchange (FTSE) 100 over a five-year period using an established accounting-based valuation model. Our results show that human capital investment discourse leads to overweighting of the forecasted longer-term earnings in the apportionment of share price constituents, suggesting that investors consider investment in employees to generate more return in the longer-term. Additionally, our findings prove that investors respond to firm level human capital resource as an investment generating more return in the longer-term. This emphasises the importance of communicating human capital resource investment information that accurately reflects the firm value creation via employees in external financial reporting.
Text
Vithana et al Human Capital Resource IJHRM 2021
- Accepted Manuscript
More information
Accepted/In Press date: 14 September 2021
e-pub ahead of print date: 13 October 2021
Published date: 13 October 2021
Additional Information:
Publisher Copyright:
© 2021 The Author(s). Published with license by Taylor & Francis Group, LLC.
Keywords:
FTSE 100, human capital resource, human resource expenditure, market myopia, value added
Identifiers
Local EPrints ID: 452465
URI: http://eprints.soton.ac.uk/id/eprint/452465
ISSN: 0958-5192
PURE UUID: ef4f978e-6a73-4da7-93b3-f2804dd7d618
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Date deposited: 11 Dec 2021 11:03
Last modified: 17 Mar 2024 06:51
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Author:
R Jayasekera
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