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An explanation of human capital disclosure from the resource‐based perspective

Subhash Abhayawansa (Faculty of Business and Enterprise, Swinburne University of Technology, Hawthorne, Australia)
Indra Abeysekera (The University of Sydney, Sydney, Australia)

Journal of Human Resource Costing & Accounting

ISSN: 1401-338X

Article publication date: 4 April 2008




Although the importance of human capital (HC) in firm value creation is firmly established in the literature, the level of emphasis placed on human capital disclosure (HCD) by preparers of financial statements and sell‐side analysts is minimal. The purpose of this paper is to address this dilemma by critically analysing the conceptualisation of HC in disclosure literature and introduce a more suitable explanation.


The paper begins by reviewing the literature on intellectual capital disclosure (ICD) to examine the level of HCD in various company media and the use of such information by the capital market. It then critically analyses the conceptualisation of HC in those studies with a view to forming an opinion about the adequacy of that conceptualisation. Then the resource‐based view is justified as providing a more appropriate conceptualisation of HC to meet demands of the capital market.


Substantial ICD literature conceptualises HC using HC theory as a collection of knowledge and competences possessed by employees individually and collectively in firms. This has resulted in HC disclosure scores being considerably low compared to external and internal capital disclosure and does not portray HC in a way that is useful to the capital market. A resource‐based perspective enables HC to be depicted in a way that closely resembles the value creation potential of firms' employees.

Practical implications

Guidance is provided for future HCD and ICD studies to operationalise HC and to reflect its value creation potential by encompassing not only the firm specific stock of knowledge and capabilities of employees, but also the strategic HC management practices. Thus the corporate culture and the idiosyncratic systems and practices of the firm which are in place are enabled in to reaping the benefits of these.


ICD literature portrays HC as the least important intellectual capital subcategory. However, anecdotal evidence suggests otherwise. This study is the first attempt to clarify and provide an explanation to this dilemma.



Abhayawansa, S. and Abeysekera, I. (2008), "An explanation of human capital disclosure from the resource‐based perspective", Journal of Human Resource Costing & Accounting, Vol. 12 No. 1, pp. 51-64.



Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

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