Huang, C. , Luther, R. , Tayles, M. and Haniffa, R. - UWE Research ...

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Our fourth and final explanation arises out of a combination of Hofstede-Gray „secretiveness‟ culture, and a tendency towards more concentrated company ownership in developing countries with relatively immature capital markets. Voluntary disclosure of human resource capabilities is costly to produce and may risk commercial advantage, such as the poaching of key personnel who are value creators. Thus, in circumstances where existing and potential shareholders are perceived to come from a limited pool, especially if reinforced by a relatively secretive culture in which one discloses only what one has to, less informative human capital disclosures should be expected. 21 In this Malaysian case study, there appears to be a pattern of disclosing human capital information which is commonly known, readily available, convenient and to a degree quantifiable. These are not the characteristics of human capital information which are necessary or useful in evaluating companies‟ potential. Some of the data suit the stewardship and governance role of corporate reporting but it is not helpful in assessing value. Its predominance may be attributed to an overlay of “a full-disclosure regime (responding after the 1997-8 crisis to) … an embedded- relational governance model” (Loftus and Purcell, 2008, pp. 337-345). But it is less helpful for the user who wants to consult the financial reports in order to make a decision about company strengths, competitive advantage and prospects. There is an apparent reluctance or inability to report the more difficult uncertain and intangible data surrounding the human capital of the enterprise. Our research echoes the concern, in this developing country, about a “box- ticking mentality … where companies merely comply in form … without giving heed to the spirit of the requirement” 22 We find support for the work of Ensslin and de Carvalho (2007) who were also interested in human capital disclosure in developing countries. They contrasted their findings from the annual reports of 25 listed 35
Brazilian companies and from Abeysekera‟s (2007) Sri Lankan study (both proxies for developing countries) against Guthrie and Petty‟s (2000) study of IC disclosure by Australian companies in a developed country context. An adapted extract of their results is shown in Table 5. Table 5: Human capital disclosure: reporting frequency in developed versus developing countries Most reported elements Least reported elements Developed country Entrepreneurial spirit Vocational qualifications Developing countries Education (and employee relations) Source: Ensslin and de Carvalho (2007) 36 Entrepreneurial spirit; know- Table 5 shows a contrast between Australia (proxy for developed countries) where companies adopt the relatively active approach of reporting more of the less readily quantified, and arguably more valuable human capital information, as against Brazil and Sri Lanka which display a more compliant, formal, quantifiable, mechanistic „box-ticking‟ posture. This can be illustrated in more detail by the fact that only 30% of the Australian companies disclosed information about the education levels of their workforce while in Brazil the proportion giving this information was 72% (Ensslin and de Carvalho, 2007). how We identify a tension between, in one dimension, value-adding versus non value-adding information and in the other dimension the degree of measurability; this is depicted in Figure 1. The reporting of measurable data (often tangible matters such as qualifications and length of service etc of directors, most of whom are non-execs), may not be value adding (top right quadrant) but serves the purpose of stewardship and governance functions of disclosure. Conversely, there is reluctance and difficulty in providing data on aspects such as details of companies‟ human capital strategies
Page 1 and 2: Huang, C. , Luther, R. , Tayles, M.
Page 3 and 4: Human Capital Disclosures in Develo
Page 5 and 6: The remainder of the paper is organ
Page 7 and 8: education, experience and attitudes
Page 9 and 10: Abeysekera and Guthrie (2004) and A
Page 11 and 12: their research find that, amongst M
Page 13 and 14: normative supply-side perspective w
Page 15 and 16: Another important consideration in
Page 17 and 18: Table 1. Information about intervie
Page 19 and 20: Each annual report was downloaded i
Page 21 and 22: potential to go forward. … Even i
Page 23 and 24: 29 human capital items considered,
Page 25 and 26: In broad terms, Table 3 shows two g
Page 27 and 28: organisational climate is 83%. The
Page 29 and 30: for them to stay on. In other words
Page 31 and 32: disclosed information is centered o
Page 33 and 34: companies do disclose information a
Page 35: who were not included in the term
Page 39 and 40: managers and private shareholders t
Page 41 and 42: References Abeysekera, I. and Guthr
Page 43 and 44: Ensslin, S.R. and De Carvalho, F.N.
Page 45 and 46: Li, J., Pike, R. and Haniffa, R. (2
Page 47 and 48: (Eds), Health and Management Contro
Page 49 and 50: 1 “… it is left in the hands of

Huang, C. , Luther, R. , Tayles, M. and Haniffa, R. - UWE Research ...

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