Human capital resources accounting and firm value creation: a governance and board decision-making perspective

The potential of employees to generate future wealth for firms has become a vital factor in determining success in turbulent business environments. Though much research is done on aspects of human capital resource, there is no consensus on accounting and financial reporting recognition of human capital investment. Moreover, there are disjoints between researchers' efforts on valuing, accounting for and financial reporting recognition of human capital investment, and practitioners' efforts in applying these concepts. Thus, integrating human capital resource information for firm decision making - be it at strategic or operational level - remains challenging. Identifying practical and empirical gaps, this chapter critically evaluates the relevant academic and practitioner literature, with emphasis on board decision making and corporate governance practices. We highlight the practical significance of recent research projects published from a broad human capital accounting and disclosure perspective which provide guidance on the development of a human capital resource disclosure framework.