You are here

Human capital information in management reports: An analysis of compliance with the characteristic of the relevance of disclosure

Journal Name:

Publication Year:

Abstract (2. Language): 
Purpose: The aim of this paper is to assess the compliance with the characteristic of the relevance of disclosure in Management Reports, particularly dealing with Human Capital (HC) information. Design/methodology/approach: We codify all instances where narratives of IBEX-35 stock index companies over a five year period in Spain comply with the recommendations for a “high quality” Management Commentary (MC) in terms of the relevance characteristic of the information disclosed (IASB, 2005). Findings: The analysis results show that a greater quantity of information about HC in terms of the number of pages devoted is not always indicative of higher quality in terms of relevance if we look for the application of IASB recommendations. Research limitations/implications: Further research could assess compliance with other qualitative characteristics required by other standards or guidance that were internationally accepted. Practical implications: Among the areas that require improvement in HC disclosures we highlight forward-looking information. Social implications: We propose that an internationally accepted agreement must be struck to unite all the efforts that are being made to improve narrative information in the MC section, and specifically with reference to HC.Originality/value: This work compiles the HC disclosures identified as best practices that may serve as a reference to other companies.

JEL Codes:



AN, Y.; DAVEY, H.; EGGLETON, I.R.C. (2011), Towards a comprehensive theoretical framework
for voluntary IC disclosure. Journal of Intellectual Capital, 12(4): 571-585.
ARANGUREN, N.; OCHOA, E. (2008). Divulgación de información sobre empleados y medio
ambiente en España y Alemania: una nota de investigación. Revista de contabilidad, 11(2):
ARCHEL, P. (2003). La divulgación de la información social y medioambiental de la gran
empresa española en el periodo 1994-1998: situación actual y perspectivas. Revista
Española de Financiación y Contabilidad, 23(117): 571-599.
AX, CH.; MARTON, J. (2008). Human capital disclosures and management practices. Journal of
Intellectual Capital, 9(3): 433.
BEATTIE, V.; MCINNES, B.; FEARNLEY, S. (2002). Narrative Reporting by Listed UK Companies:
A comparative Within-Sector Topic Analysis. (Last access date: March, 2006). Available
online in:
BEATTIE, V.; MCINNES, B.; FEARNLEY, S. (2004). A methodology for analysing and evaluating
narratives in annual reports: a comprehensive descriptive profile and metrics for disclosure
quality attributes. Accounting Forum, 28: 205-236.
BELLORA, L.; GÜNTHER, T.W. (2013). Drivers of Innovation Capital Disclosure in Intellectual
Capital Statements: Evidence from Europe. Innovation Finance & Accounting eJournal, 1(9):
1. Available online in: (Last access date: February 22th,
BERETTA, S.; BOZZOLAN, S. (2004). A framework for the analysis of firm risk communication.
The International Journal of Accounting, 39: 265-288.
BOTOSAN, C. (2004). Discussion of A framework for the analysis of firm risk communication.
The International Journal of Accounting, 39: 289.
BRONZETTI, G.I.; VELTRI, S. (2013). Intellectual capital reporting in the Italian non-profit
sector. A case study analysis. Journal of Intellectual Capital, 14(2): 246-263.
BUSHEE, B.J. (2004). Discussion of Disclosure practices of Foreign Companies Interacting with
U.S. Markets. Journal of Accounting Research, 42(2): 509-525.
679X.2004.00147.x CARINI, C.; VENEZIANI, M.; BENDOTTI, G.; TEODORI, C. (2013). Content and quality of
information: Analysis of the management discussion session in the Italian financial reports
in the period 2003-2008. Corporate Ownership and Control, 10(4CCONT2): 248-264.
CHANDER, S.; MEHRA, V. (2011). A study on intangible assets disclosure: An evidence from
Indian companies. Intangible Capital, 7(1):1-30.
CNMV (Comisión Nacional del Mercado de Valores) (2013). Guía para la elaboración del
informe de gestión de las entidades cotizadas. Available online in:
DAVISON, J. (2008). Repetition, rhetoric, reporting and the ‘’ era: words, pictures,
intangibles. Accounting, auditing and accountability Journal, 21(6): 791-826.
DUMAY, J.; CAI, L. (2014). A review and critique of content analysis as a methodology for
inquiring into IC disclosure. Journal of Intellectual Capital, 15(2): 264-290.
DUMAY, J.; ROONEY, J. (2011). Measuring for managing?. An IC practice case study. Journal of
Intellectual Capital, 12(3): 344-355.
EDVINSSON, L.; MALONE, M.S. (1997). Intellectual Capital: Realizing your company's true
value by findings its brainpower. New York, NY: HarperCollins Publishers.
FASB (2012). Invitation to comment. Discussion Paper. Disclosure Framework. 12 July.
FIRTH, M. (1979). The impact of size, stock market listing and auditors on voluntary disclosure
in corporate annual reports. Accounting & Business Research autumn, 9(36): 273-280.
FONTANA, F.; MACAGNAN, C. (2013). Factors explaining the level of voluntary human capital
disclosure in the Brazilian capital market. Intangible Capital, 9(1): 305-321.
GAMERSCHLAG, R. (2013). Value relevance of human capital information. Journal of
Intellectual Capital, 14(2): 325-345.
GAMERSCHLAG, R.; MOELLER, K. (2011). The positive effects of human capital reporting.
Corporate Reputation Review, 14(2): 145-155.
GHANI, W.I.; HAVERTY, J.L. (1998). Market reaction of Multinational corporations to the
Passage of the General Agreement on Tariffs and Trade (GATT). Journal of International
Accounting, Auditing & Taxation, 7(1): 95-112. GRANT, R.M. (2004). Contemporary Strategy analysis: concepts, techniques, applications.
Malden (MA): Blackwell.
GRAY, R; JAVAD, M.; POWER, D.; SINCLAIR, C.D. (2001). Social and environmental disclosure
and corporate characteristics. A research note and extension. Journal of Business Finance &
Accounting, 28(3-4): 327-356.
GUTHRIE, J. (2014). In defence of disclosure studies and the use of content analysis: a
research note. Journal of Intellectual Capital, 15(2): 5-9.
GUTHRIE, J.; PETTY, R.; YONGVANICH, K.; RICCERI, F. (2004) Using content analysis as a
research method to inquire into intellectual capital reporting. Journal of Intellectual Capital,
5(2): 282-293.
HERMANSON, R. (1964). Accounting for human assets. Occasional Paper nº 14; East Leasing:
Bureau of Business and Economic Research. Michigan State University.
HOLSTI, O.R. (1969). Content analysis for the Social Sciences and Humanities. Reading, MA:
Addison Wesley Publishing Company.
HOOKS, J.; COY, D.; DAVEY, H. (2002). The information gap in annual reports. Accounting,
Auditing & Accountability Journal, 15(4):501-522.
IASB (2005). Discussion Paper: Management Commentary. October.
IASB (2010). Project Summary and feedback Statement. Management Commentary. An IFRS
Practice Statement. December.
ICAC (Instituto de Contabilidad y Auditoría de Cuentas-Spanish Accounting and Auditing
Institute) (2002). Informe sobre la situación actual de la contabilidad en España y líneas
básicas para abordar su Reforma (Libro Blanco para la reforma de la contabilidad en
España). Madrid: ICAC.
IFRS FOUNDATION (2013). Joint effort needed to tackle disclosure problem. Press release,
24(January): 1-2.
IIRC (International Integrated Reporting Council) (2013). International Integrated Reporting
Framework. December, 8th.
JOHANSON, U. (1996). Increasing the transparency of investments in intangibles. Speech to
OCDE conference in Chateau Laurier. Otawa, December, 2nd.
JONES, M.; SMITH, M. (2014). Traditional and alternative methods of measuring the
understandability of accounting narratives. Accounting, Auditing & Accountability Journal,
27(1): 183-208. KENT, P.F.; ZUNKER, T. (2013). Attaining Legitimacy by Employee Information in Annual
Re p o r t s . Accounting, Auditing & Accountability Journal, 26(7): 1072-1106.
KNAUER, T. (2010). Relevance, quality and determinants of human capital disclosure -an
empirical analysis of the German HDAX companies. Zeitschrift fur Personalforschung, 24(3):
KRAVET, T.; MUSLU, V. (2013). Textual risk disclosures and investors’ risk perceptions. Review
of Accounting Studies, December 18(4): 1088-1122.
LI, F. (2010). Textual analysis of corporate disclosures: a survey of the literature. Journal of
accounting literature, 29: 143-165.
LINSLEY, P.; SHRIVES, P.J. (2006). Risk reporting: A study of risk disclosures in the annual
reports of UK companies. The British Accounting Review, 38(4): 387-404.
LOUGHRAN, T.; MCDONALD, B. (2015). The use of Word lists in textual analysis. Journal of
Behavioral Finance, 16(1): 1-11.
MERITUM (1998). Measuring Intangibles to Understand and Improve Innovation Management.
Proposal for a cost-shared RTD project. TSER European Programme. IV Framework
MERITUM PROJECT (2002). Guidelines for managing and reporting on intangibles. Madrid:
Fundación Arital Móvil.
MERKL-DAVIES, D.M.; BRENNAN, N.M. (2011). A conceptual framework of impression
management: new insights from psychology, sociology and critical perspectives. Accounting
and Business Research, 41(5): 415-437.
PASCUAL, E.; MONEVA, J.M.; FUERTES, Y. (2001), Información de base social en el sector
eléctrico español: análisis del contenido y factores explicativos. Cuadernos de economía y
dirección de la empresa, 9: 227-248.
PIERROT, F.; SPRING, S. (2010). CSR in the Corporate Discourse: A lexical study of French
listed companies. Paper presented at 33 European Accounting Association Congress: 19
May, Istambul, Turquey.
SCHLEICHER, T.; WALKER, M. (2010). Bias in the tone of forward-looking narratives.
Accounting and Business Research, 40(4): 371-390. SPRINGER, L. (1992). Enhancing the Annual Report: Investor Relations and the MD&A. The
Journal of Bank Accounting & Auditing, winter, 5(2): 27-31.
STOCK, H. (2003). Poor MD&A Tops SEC Concern Over Annuals. Investor Relations Business,
10(March): 1.
SUJAN, A.; ABEYSEKERA, I. (2007). Intellectual Capital Reporting Practices of the Top
Australian Firms. Australian Accounting Review, 17(42): 71-83.
SVEIBY, K.E. (1997). The new organizational wealth: managing and measuring knowledgebased
assets. San Francisco: Berrett-Koehler Publishers.
TILLING, M.V.; TILT, C.A. (2010). The edge of legitimacy: Voluntary social and environmental
reporting in Rothmans' 1956-1999 annual reports. Accounting, Auditing & Accountability
Journal, 23(1): 55-81.
TOO, S.W.; SOMASUNDARAM, N.R. (2011). Determinants of corporate disclosure on
intellectual capital in Malaysian IPO prospectuses International. Journal of Learning and
Intellectual Capital, 8(4): 418-435.
TOWER, G.; PIGNATEL, I.; HAHN, T.; RAJA, A.; RAJA, A. (2010). Transparency of Social and
Environmental Disclosures by the Top French Companies. The Journal of Contemporary
Issues in Business and Government, 16(1): 26-49.
UNIÓN EUROPEA (2006). RICARDIS reporting intellectual capital to augment research,
development and innovation in SMEs. Available online in:
WYATT, A.; FRICK, H. (2010). Accounting for investments in human capital: A review.
Australian Accounting Review, 20(3): 265-273.

Thank you for copying data from