Human capital disclosure from the intellectual capital and social responsibility perspectives: the role of corporate governance

Abstract

Intangible Resources are considered one of the most important elements of a company’s competitive advantage and a crucial factor for the creating of a company’s sustainable value over time, in particular the Human Resources. These resources have been recognized in the literature as Intellectual Capital, composed of Human, Structural and Relational Capital. In addition, sustainability address companies to adopt a "triple bottom line" to include economic, environmental and social aspects. Activities undertaken by companies concerning social responsibility create value. This value is of an intangible nature and offers companies the ability to create, share and manage knowledge that supports the creation of sustainable competitive advantages. This could be oriented to the attraction, retention and management of talent people who are part of the company, promoting the creation of knowledge (Human Capital). In this context, the main objective of our work is to analyse Human Capital disclosure by companies. The main contribution of this study is that it extends previous works considering the Intellectual Capital and Social Responsibility perspectives. Regarding the Intellectual Capital, the study analyses the education, training, experience, skills and competencies at work, values and attitudes of workers and others. With regard to Social Responsibility, it analyses information about social and ethical issues concerning relations between workers and companies, health and safety in the workplace, diversity and equal opportunities, among others. This study provides evidence on whether these categories are reported in integrated annual and sustainability reports, under the framework of the resources and capabilities, legitimacy and stakeholders theories. On the other hand, the information disclosure is considered an integral part of Good Corporate Governance and being transparency a key element for a good system of corporate governance. Information disclosure is an important and efficient means of protecting shareholders, since higher information disclosure could contribute to reduce information asymmetry, to clarify the conflict of interests between shareholders and management. Based on agency theory, our second objective is to examine the importance of corporate governance mechanisms on human capital disclosure. This research conducted a content analysis of integrated annual reports and sustainability reports on a sample of companies listed on the Spanish Stock Exchange (IBEX 35). Balanced panel data analysis techniques were used to test our hypothesis.