The Nature and Motivation of Human Capital Reporting (HCR): A Preliminary Study

  • Shukriah Saad Universiti Teknologi MARA
  • Mohammat Sabri Hassan Universiti Kebangsaan Malaysia, Malaysia


The purpose of this paper is to explore the external disclosure of human capital (HC). This study aims to examine the nature of human capital reporting of public listed companies in Malaysia, investigate the motivational motive towards the extent of human capital reporting from preparer’s point of view and identify the problems that might be faced in reporting human capital information. This study is based on a cross-sectional examination of disclosures on HCR by 20 public listed companies in Malaysia. The information about human capital presented in annual reports is grouped into five themes defined in the literature. A content analysis of these 20 annual reports is conducted to measure the nature and level of HCR. Besides the number of sentence count, narrative text unit adopted from Beattie et al. (2004) is also applied as unit of analysis. A questionnaire survey for HR managers of the Malaysian listed companies is conducted to find out the respondents’ motivation to disclose information in respect of reported items of HCR. Responses are compared with the results obtained from the measured HCR through content analysis. The findings demonstrate the most reported items of human capital, a comprehensive and descriptive profile of narrative disclosures of human capital items as well as the rank of motives for disclosures. Trading and the services industry have the highest score for the number of sentence count and the narrative text unit. The most reported items by sentence and narrative text unit are the working environment and employee’s involvement in the community. Most companies provide narrative descriptions with historical, non-financial and non-quantitative orientation. The nature of disclosure is explained by the possible motivation and problems faced by companies in disclosing human capital. The data in this study are from secondary sources of disclosures which only focus on 20 listed companies due to the limited one year period of study. The small sample of survey is unable to address HCR in a comprehensive and detailed manner across the industry.This study promotes better understanding of current HCR practices in Malaysian companies and provides better input for users to identify the importance placed on the selected human capital information in annual reports. In addition, the study might provide a framework for examining the motivation that may influence companies to improve their disclosure policy. This paper is an empirical and exploratory study about the practices of HCR among listed companies in Malaysia. This paper contributes to the understanding of HC and its disclosure behaviour by investigating the issues of their motives of disclosure and problems that hinder voluntary disclosure of such information. Different motivations may bring different implications to the nature of reported human capital items.Keywords: Human capital, Human capital attributes, Disclosure, Motivation
Dec 30, 2013
How to Cite
SAAD, Shukriah; HASSAN, Mohammat Sabri. The Nature and Motivation of Human Capital Reporting (HCR): A Preliminary Study. Management & Accounting Review (MAR), [S.l.], v. 12, n. 2, p. 19-46, dec. 2013. ISSN 2550-1895. Available at: <>. Date accessed: 30 nov. 2022. doi: