Human Capital Reporting (HCR) and Shareholder Value Maximization in Listed Manufacturing Firms in Nigeria

Abstract

This study examines the impact of human resource reporting (HCR) or disclosures on share price and earnings potential measured by the earnings per share. It adopts an ex-post causal research design and employs secondary data retrieved from annual reports of 30 selected manufacturing firms in Nigeria. Data was analyzed using descriptive statistics, correlation analysis and the quantile regression techniques. The research outcome from the distributional dynamics for share price tends to highlight that the effect of HRD-Index is significant at 5% for firms at high levels above average financial performance at Q[0.2.] - Q[0.4] and also significant at 5% for firms at average levels of firm value Q[0.5] and even below average levels Q[0.6]-Q[0.9]. Finding thus highlights that the impact of human resource disclosures on share price or market value may not necessarily be a function of the share price levels. The distributional dynamics for EPS used as the measure for earnings potential is similar to that which was observed for Share price and tends to highlight that the effect of human resource disclosure is significant at 5% for firms at high levels above average earnings per share measure of financial performance at Q[0.1], Q[0.2.], Q[0.3.] and Q[0.4.] and also significant at 5% for firms at average levels of financial performance Q[0.5] and even below average levels Q[0.6]-Q[0.8]. The recommendation is that human resource investments should not been looked at as an expense but as a competitive strategy of the firm.