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HUMAN RESOURCE INFORMATION DISCLOSURE PRACTICES IN FINANCIAL REPORT * Silender Singh, Assistant Professor, Chaudhary Devi Lal University, Sirsa. ** RenuSindhu, Research Scholar, Deptt. Of Coomerce, Chaudhary Devi Lal University, Sirsa. ABSTRACT In the last few decades a number of economists have approved the importance of human resource for overall management of organization. As information about these resources are most important for every stakeholder.In the present study data iscollected from 2005 to 2015 of50 companiesof public and private sector. The techniques used for analyzing data include average, percentage and HRI disclosure index. It is found that out of 28 variables on (11) which are strategic have severe gaps in disclosure in annual financial reports of both sectors. It is suggested that separate HRA statement should be disclosed by private sector firms so that execution of government policies for the welfare of employees may be examined and investors may be able to decide how efficiently and effectively their investments will provide dividend. Keywords: Disclosure, HRADI. 1. INTRODUCTION In current era,isgetting much importance as manufacturing and services sectors largely depending on computer integrated manufacturing activities.Therefore, HR value of human resource is chiefly in organization‟s total wealth. HR should also be recorded as an asset in financial statements under the head of fixed assets. Presently, financial statements are prepared under the guidelines of conventional reporting framework and treats human resources investment as expenditures, and writeoff these investments from current year profits and loss account, which is violation of International Accounting Standard -1, presentation of financial statements (IAS-1) which states that financial statement should be prepared on the basis of matching concept. There are two major reasons for recognition of human capital as an asset; first, HR are a valuable resource for a firm to sustain a long-term competitive advantage as long as employees rendered services for organization, future economic benefits flow towards organization from the investment made on HR. Secondly, thevalue of HR is based on the knowledge, capabilities andskills developed in the organization through investment. (Eric G Flamholtz, D. Gerald Searfoss& Russell Coff,1988) also supported that training increased future benefits from the service of the employees so cost of employee should be capitalised and not expensed as is current practice. Eric Flamhoitz (1988) defines HRA as „accounting for people as an organizational resource. It involves measuring the costs incurred by organizations to recruit, select, hire, train and develop human assets. It also involves measuring the economic value of people to the organization‟. According to Stephen Knauf, „HRA is the measurement and quantification of human organizational inputs such as recruiting, training, experience and commitment‟. Human Resources (HR) is the energies, skills, talents and knowledge of people which are, or which potentially can be applied to the production of goods or rendering useful services. HRA also find out the present economic value of its employees and managers, after measuring the cost and value of its employees, the organization prepares a report is called HRA report. It is shown to the top-level management and employees and outside parties. According to the American Accounting Associations Committee on HRA, it is the process of identifying and measuring data about human resources and communicating INTERCONTINENTAL JOURNAL OF HUMAN RESOURCE RESEARCH REVIEW ISSN: 2320-9704 - ONLINE ISSN:2347-1662 - PRINT IMPACT FACTOR:4.169 VOLUME 5, ISSUE 12, DECEMBER 2017 An Open Access, Peer Reviewed, Refereed, Online and Print International Research Journal www.icmrr.org 5 [email protected] SILENDER SINGH* RENU SINDHU**
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Page 1: HUMAN RESOURCE INFORMATION DISCLOSURE … · employees may be examined and investors may be able to decide how efficiently and effectively their ... does not require company to furnish

HUMAN RESOURCE INFORMATION DISCLOSURE PRACTICES IN

FINANCIAL REPORT

* Silender Singh, Assistant Professor, Chaudhary Devi Lal University, Sirsa.

** RenuSindhu, Research Scholar, Deptt. Of Coomerce, Chaudhary Devi Lal University, Sirsa.

ABSTRACT

In the last few decades a number of economists have approved the importance of human resource for

overall management of organization. As information about these resources are most important for

every stakeholder.In the present study data iscollected from 2005 to 2015 of50 companiesof public

and private sector. The techniques used for analyzing data include average, percentage and HRI

disclosure index. It is found that out of 28 variables on (11) which are strategic have severe gaps in

disclosure in annual financial reports of both sectors. It is suggested that separate HRA statement

should be disclosed by private sector firms so that execution of government policies for the welfare of

employees may be examined and investors may be able to decide how efficiently and effectively their

investments will provide dividend.

Keywords: Disclosure, HRADI.

1. INTRODUCTION

In current era,isgetting much importance as manufacturing and services sectors largely depending on

computer integrated manufacturing activities.Therefore, HR value of human resource is chiefly in

organization‟s total wealth. HR should also be recorded as an asset in financial statements under the

head of fixed assets. Presently, financial statements are prepared under the guidelines of conventional

reporting framework and treats human resources investment as expenditures, and writeoff these

investments from current year profits and loss account, which is violation of International Accounting

Standard -1, presentation of financial statements (IAS-1) which states that financial statement should

be prepared on the basis of matching concept. There are two major reasons for recognition of human

capital as an asset; first, HR are a valuable resource for a firm to sustain a long-term competitive

advantage as long as employees rendered services for organization, future economic benefits flow

towards organization from the investment made on HR. Secondly, thevalue of HR is based on the

knowledge, capabilities andskills developed in the organization through investment. (Eric G

Flamholtz, D. Gerald Searfoss& Russell Coff,1988) also supported that training increased future

benefits from the service of the employees so cost of employee should be capitalised and not

expensed as is current practice. Eric Flamhoitz (1988) defines HRA as „accounting for people as an

organizational resource. It involves measuring the costs incurred by organizations to recruit, select,

hire, train and develop human assets. It also involves measuring the economic value of people to the

organization‟. According to Stephen Knauf, „HRA is the measurement and quantification of human

organizational inputs such as recruiting, training, experience and commitment‟. Human Resources

(HR) is the energies, skills, talents and knowledge of people which are, or which potentially can be

applied to the production of goods or rendering useful services. HRA also find out the present

economic value of its employees and managers, after measuring the cost and value of its employees,

the organization prepares a report is called HRA report. It is shown to the top-level management and

employees and outside parties. According to the American Accounting Associations Committee on

HRA, it is the process of identifying and measuring data about human resources and communicating

INTERCONTINENTAL JOURNAL OF HUMAN RESOURCE RESEARCH REVIEWISSN: 2320-9704 - ONLINE ISSN:2347-1662 - PRINT IMPACT FACTOR:4.169VOLUME 5, ISSUE 12, DECEMBER 2017

An Open Access, Peer Reviewed, Refereed, Online and Print International Research Journalwww.icmrr.org 5 [email protected]

SILENDER SINGH* RENU SINDHU**

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this information to interested parties. In the HRA approach, expenditures related to human resources

are reported as assets on the balance sheet as opposed to the traditional accounting approach which

treats costs related to a company„s human resources as expenses on the income statement that reduce

profit. Same as non-financial information should be shown in the financial statements as additional

information which is useful to decision makers.

In India corporate sector has not given much consideration to issues related to human resource

accounting and information. This concept is struggling for acceptance and importance since its

inception in 1970. Indian Companies Act (1956) does not require company to furnish information

retaliated to personnel cost in their annual report. Human resource accounting was first used in public

sector by Bharat Heavy Electrical ltd (BHEL) in fiscal year 1972-73. In private sector,Infosys Ltd.

introduced it in 1990s and since then human resource accounting becoming popular. Further, this

concept has also gained popularity in manufacturing industry with firm such as Reliance Industries

furnishing information about human resource in their annual report. Human resource accounting and

information has gained much acceptance among the various professionals for making decision in

India such as managers, CEO, accountant and analyst.

INTERCONTINENTAL JOURNAL OF HUMAN RESOURCE RESEARCH REVIEWISSN: 2320-9704 - ONLINE ISSN:2347-1662 - PRINT IMPACT FACTOR:4.169VOLUME 5, ISSUE 12, DECEMBER 2017

An Open Access, Peer Reviewed, Refereed, Online and Print International Research Journalwww.icmrr.org 6 [email protected]

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2. REVIEW

Review examined and evaluated research prevailing methodologies and gaps in research area identified. In the present section an attempt has been made to

review the studies concerned to human resource practice:

Table 1- Classification of Variables Concerned with HR Disclosure Practice:

Sr.

No.

Study Country Sample Dependent and Independent

variables

Test used Result

1 Williams (2001) U K 31companies listed

on the FTSE, from

1996- 2000

Dependent variables- quantity of

intellectual capital disclosure,

measured disclosure index,

independent variables organization

size, industry type, listing status,

leverage, physical capital

performance

Wilcoxon matched pair sign

rank test, paired sample t tests

Significant

Negative

2 Abdolmohammadi (2005) USA 58 companies (1993-

1997)

Dependent variable-intellectual

capital (internal capital, external

capital and human capital)

independent variable- market

capitalization

Standard deviation, coefficient

of variation (COV), regression,

Significant

Positive

3 White, Lee and Tower

(2007)

Australia 96 companies,

financial year 2005

Independent variables- firm age,

level of leverage, firm size

dependent variables- voluntary ICD

Bivariate correlation and linear

regression analysis

Significant

positive

4 Woodcock and Whiting

(2009)

Australia 70 Australian

publicly listed firms

Dependent variable-intellectual

capital disclosure (ICD),

independent variables-industry

type, ownership concentration,

listing age, leverage and auditor

type

Correlation and regression

analysis

Significant

Negative

5 Rimmel, Nielsen and Japan Initial public Dependent variable- intellectual Analysis of Variance (ANOVA) Significant

INTERCONTINENTAL JOURNAL OF HUMAN RESOURCE RESEARCH REVIEWISSN: 2320-9704 - ONLINE ISSN:2347-1662 - PRINT IMPACT FACTOR:4.169VOLUME 5, ISSUE 12, DECEMBER 2017

An Open Access, Peer Reviewed, Refereed, Online and Print International Research Journalwww.icmrr.org 7 [email protected]

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Yosano (2009) offering (IPO)

prospectuses from

all stock exchange

listings on the Japan

stock exchange from

2003

capital disclosure, Independent

variables -industry differences,

managerial ownership, company

size, and company age

Negative

6 BruggenVergauwen,Dao

(2009)

Australia 125 publicly listed

Australian firms

Dependent variable ICD, and

independent variables were

company size, leverage, and

Information asymmetry

Ordinary Least Square (OLS),

multiple regression

Significant

Negative

7 Sharabati, Jawad and

Bontis (2010)

Jordan Primary data, 132

top- and middle-

level managers

Intellectual capital (human capital,

structural capital, relational capital)

and business performance

Pearson‟s bi-variate correlation

coefficient, ANOVA

Significant

Positive

8 Abeysekera (2010) Nairobi 26 firms Nairobi

Stock Exchange

Independent variables- intellectual

capital disclosure dependent

variables-strategic internal capital

disclosure, strategic external capital

disclosure, strategic human capital

disclosure, tactical internal capital

disclosure, tactical external capital

disclosure, tactical human capital

disclosure

Logistic regression Significant

Positive

9 Taliyang, Latif and

Mustafa (2011)

Malaysia 150 companies listed

in Bursa Malaysian

Independent variables- age, size,

Leverage, profit, ownership, growth

dependent variable- intellectual

capital disclosure

Ordinary Least Square (OLS)

regression

Significant

negative

10 Ahmed Haji and

Mubaraq (2012)

Nigeria 25 banks (2006-

2009)

Dependent variable- intellectual

capital (IC) disclosure practices,

Friedman test, one-way repeated

measures ANOVA), Wilcoxon-

Significant

positive

INTERCONTINENTAL JOURNAL OF HUMAN RESOURCE RESEARCH REVIEWISSN: 2320-9704 - ONLINE ISSN:2347-1662 - PRINT IMPACT FACTOR:4.169VOLUME 5, ISSUE 12, DECEMBER 2017

An Open Access, Peer Reviewed, Refereed, Online and Print International Research Journalwww.icmrr.org 8 [email protected]

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independent variables- corporate

governance development,

restructuring exercise and the

subsequent policy changes

Signed ranks, paired sample t-

test, Kruskal-Wallis test, Mann

Whitney U-test

11 Wickramasinghe and

Fonseka (2012)

Sri

Lanka

30 firms listed in

stock exchange

Dependent variables- human

resource management, human

resource disclosure human resource

measurement

Independent variables -age and size

x 2 test, principal component

factor analysis, independent

sample t-test

Significant

positive

12 Fontana and Macagnan

(2012)

Brazil 29 companies (2005-

2009) listed in

Brazilian stock

exchange

Dependent variables- voluntary

human capital, independent

variables- size, debt, growth

Multiple linear regression,

correlation

Significant

positive

13 Athanasiosa, Antoniosa,

Despinaa (2013)

Greek 38 companies, listed

in Greek stock

exchange

Dependent variables-human

resource disclosure; corporate

social responsibility independent

variables- size, industry

membership, profitability,

Quotation on the Stock Market,

Global Reporting Initiative (GRI)

Multiple linear regression

model, Mann-Whitney and t-

tests

Significant

positive

14 Michael (2013) Nigeria 12 firms listed in

Nigeria stock

exchange

Dependent variable HRADI and

independent variable was size

ANOVA, T-test and Correlation Significant

positive

15 Kamardin, abuBakar and

Ishak et. al. (2013)

Malaysia 68 biggest

Malaysian

companies listed in

Bursa Malaysia

Dependent variable - intellectual

capital index Independent variables

-Profitability, firm size, Value

Added Intellectual Coefficient,

Leverage

Pearson Correlation,Regression

Analysis

Significant

negative

INTERCONTINENTAL JOURNAL OF HUMAN RESOURCE RESEARCH REVIEWISSN: 2320-9704 - ONLINE ISSN:2347-1662 - PRINT IMPACT FACTOR:4.169VOLUME 5, ISSUE 12, DECEMBER 2017

An Open Access, Peer Reviewed, Refereed, Online and Print International Research Journalwww.icmrr.org 9 [email protected]

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16 EnyiandAkindehinde

(2014)

Nigeria 16 publicly quoted

Nigerian banks

Dependent variables- human

resource accounting, Independent

variables- decision making process

Regression analysis model and

validated using ANOVA and F

ratio

Significant

positive

17 Khodabakhshi and

Khadijeh (2014)

Annual reports of

Infosys for the years

2005-06 to 2011-12

Dependent variable- human

resource valuation, Independent

variables- financial variables,

predictor variables and HRV per

employee

Correlation analysis Significant

negative

18 Sharma and Kumar

(2014)

india 10 banks financial

year 2010-11

Dependent variable- HRADP,

Independent variables banks in

qualitative or quantitative term

HR disclosure index, t-Test Significant

positive

19 DyanaandKesavan(2015) india Primary data-300

respondents,

Dependent variable –nature,

characteristics of human resource

accounting

Independent variables-gender,

categories of employees,

designation of employees,

qualification of employees, years of

experience of employees

Factor analysis, independent t

test, anova

Significant

positive

20 Adebawojo, Enyi and

Adebawo (2015)

Nigeria 18 publicly quoted

banks in Nigeria

Dependent variable- human assets

accounting, Independent variables-

performance of business

organizations

Regression model Significant

positive

INTERCONTINENTAL JOURNAL OF HUMAN RESOURCE RESEARCH REVIEWISSN: 2320-9704 - ONLINE ISSN:2347-1662 - PRINT IMPACT FACTOR:4.169VOLUME 5, ISSUE 12, DECEMBER 2017

An Open Access, Peer Reviewed, Refereed, Online and Print International Research Journalwww.icmrr.org 10 [email protected]

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These studies have been performed in different countries to take different dependent and

independent variables andthe results are shown in the table above. Present study has examined

28 independent variables which are important in disclosure of financial statements.

Objectives of the Study

1. To study the practices for disclosure of human resource information in financial

reports of Indian Public and Private corporate sector; and

2. To compare the human resource variable-wise disclosure practices in public sector

and private sector companies.

3. RESEARCH METHODOLOGY

Hypothesis: Dispersion of the ranks of public and private sector on the basis of HRIDI is

equally distributed.

Variables Selected for Human Resource Information Disclosure (HRID):Human resource

information disclosure has measured by constructing anindex comprising twenty-eight (28)

discretionary human capital disclosure itemsconsecutively includes (1) No of employees (2)

Cost of per employees (3) Human capital investment ratio (4) The profitcreated by each

employee (5) Average salary of eachemployee (6) Employees absenteeism rate (7) Loans and

advances to employees(8) Amount spent on employees welfare activities (9) Information on

labor contracts(10) Strike and lockouts (11) Employees participation in management (12)

Amountspent on HRD programmer (13) Employees‟ pension and retirement benefits

(14)Employees turnover rate and retention rate (15) General statement on industrialrelations

(16 Occupational groups of employees (17) Work safety and health ofemployees (18)

Information about top level employees- experience, qualification,training programme (19)

Performance appraisal of employees (20) Job satisfaction(21) Promotion and career planning

(22) Employees loyalty (23) Manpowerplanning (24) Job stability, employees rights,

motivation, indirect remuneration (25)Separate HRA statement (26) Category wise

distribution (27) Discount rateapplied (28) Valuation model used.

Data Collection:The HRIDI has been constructed to quantify the levelof HRI disclosures in

annual reports of selected companies.HRI measurement and reporting practices of 50 public

and private Indian companies,the annual reports of the sample set of companies from 2005-06

to 2014-15 have been downloaded from therespective websites.

Measurement Scale:In examining each of these HRID items, a dichotomous procedure was

followed where each company was awarded a score of “1” if the company appears to have

disclosed the concerned reporting variable for each year and “0” otherwise. The score of each

company was total to find the net score of the company. An HRIDI was then computed by

using the following formula:

HRIDI = 𝑇𝑜𝑡𝑎𝑙 𝑠𝑐𝑜𝑟𝑒 𝑜𝑓 𝑖𝑛𝑑𝑖𝑣𝑖𝑑𝑢𝑎𝑙 𝑐𝑜𝑚𝑝𝑎𝑛𝑦 ×100

𝑀𝑎𝑥𝑖𝑚𝑢𝑚 𝑃𝑜𝑠𝑠𝑖𝑏𝑙𝑒 𝑆𝑐𝑜𝑟𝑒 𝑂𝑏𝑡𝑎𝑖𝑛𝑎𝑏𝑙𝑒

Kruskal-Wallis H Test has been used to analysis, whether the public and private sectors

disclosure practice significantly different.

Kruskal-Wallis H Test=12

𝑁(𝑁+1)(∑

𝑅2

𝑛)-3(N+1)

Friedman test has been applied to test whether the total ranks in two groups(Public Sector

Companies and Private Sector Companies) disclosure on the 28 variables are equal?

INTERCONTINENTAL JOURNAL OF HUMAN RESOURCE RESEARCH REVIEWISSN: 2320-9704 - ONLINE ISSN:2347-1662 - PRINT IMPACT FACTOR:4.169VOLUME 5, ISSUE 12, DECEMBER 2017

An Open Access, Peer Reviewed, Refereed, Online and Print International Research Journalwww.icmrr.org 11 [email protected]

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1. ANALYSIS AND INTERPRETATION

Table 2- HRIDI, Public Companies for Last 10 Years (2005-2015)

Year

company 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Average

Score

Rank

BHEL 60.71 64.28 60.71 82.14 78.57 82.14 89.28 89.28 89.28 92.85 78.92 1

SAIL 57.14 64.28 67.85 60.71 71.42 85.71 82.14 85.71 89.28 89.28 75.35 2

HMTL 21.42 25.00 35.71 46.42 53.57 64.28 67.85 75.00 71.42 71.42 53.20 22

ONGC 35.71 35.71 35.71 46.42 50.00 46.42 64.28 75.00 60.71 71.42 52.13 20

OIL 42.85 50.00 53.57 57.14 64.28 71.42 67.85 71.42 82.14 85.71 64.38 7

BEL 50.00 50.00 53.57 64.28 64.28 71.42 75.00 82.14 78.57 82.14 67.14 6

CCI 53.57 57.14 60.71 64.28 71.42 75.00 75.00 82.14 82.14 82.14 70.35 3

ELIL 57.14 57.14 60.71 64.28 75.00 78.57 75.00 75.00 75.00 78.57 69.64 4

PECL 42.85 53.57 60.71 67.85 67.85 78.57 75.00 78.57 75.00 82.14 68.21 5

GAIL 46.42 42.85 39.28 50.00 53.57 71.42 64.28 75.00 78.57 82.14 60.35 12

BPC 39.28 39.28 35.71 42.85 50.00 46.42 46.42 57.14 64.28 71.42 49.28 24

CRL 35.71 39.28 42.85 53.57 75.00 64.28 60.71 60.71 67.85 71.42 57.13 14

NAC 39.28 39.28 42.85 39.28 53.57 57.14 67.85 71.42 60.71 78.57 54.99 16.5

MRL 32.14 32.14 35.71 46.42 53.57 57.14 50.00 46.42 57.14 64.28 47.49 25

HPCL 39.28 39.28 42.85 57.14 60.71 67.85 60.71 53.57 60.71 71.42 55.35 15

CPCL 46.42 46.42 42.85 46.42 53.57 57.14 57.14 60.71 64.28 67.85 54.28 18

SCI 39.28 39.28 46.42 50.00 64.28 64.28 67.85 71.42 71.42 78.57 59.28 13

CCI 35.71 35.71 39.28 42.85 50.00 53.57 57.14 53.57 64.28 64.28 49.63 23

HEC 39.28 39.28 42.85 42.85 50.00 53.57 53.57 64.28 57.14 71.42 51.41 20

CSL 50.00 42.85 42.85 46.42 57.14 60.71 53.57 60.71 60.71 64.28 53.92 21

NJMC 50.00 50.00 53.57 60.71 64.28 67.85 64.28 64.28 78.57 75.00 62.84 9

NOC 42.85 42.85 46.42 57.14 57.14 60.71 60.71 57.14 57.14 67.85 54.99 16.5

HCL 42.85 50.00 64.28 76.85 57.14 60.71 75.00 60.71 71.42 71.42 63.38 8

PGCI 39.28 46.42 53.57 57.14 57.14 67.85 71.42 75.00 78.57 75.00 62.13 10

NTPC 57.14 46.42 64.28 71.42 60.71 57.14 60.71 60.71 67.85 67.85 61.42 11

Source: Developed from annual reports of companies (2005-15).

INTERCONTINENTAL JOURNAL OF HUMAN RESOURCE RESEARCH REVIEWISSN: 2320-9704 - ONLINE ISSN:2347-1662 - PRINT IMPACT FACTOR:4.169VOLUME 5, ISSUE 12, DECEMBER 2017

An Open Access, Peer Reviewed, Refereed, Online and Print International Research Journalwww.icmrr.org 12 [email protected]

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The table 1 shows the public sector companies disclose information in their financial reports but they deviate in this regard to HRADI average score, asrank of

BHEL is 1 with (78.95), SAIL (75.35) with rank 2 and CCI (70.35) with rank 3, whereas it was found very low in case of MRL (47.49) and BPC (49.28). The

range coefficient value between the largestscore and smallest score is 24.90 per cent which shows large dispersion in disclosing human resource by public

companies.

Table 3- HRIDI of Private Companies (2005-2015)

Year

Company

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Averag

escore

Rank

Infosys 46.42 46.42 53.57 64.28 64.28 75 67.85 71.42 71.42 78.57 63.92 3

IBM Ltd. 46.42 46.42 50.00 53.57 57.14 57.14 60.71 57.14 60.71 57.14 45.63 25

ICICI 46.42 46.42 50.00 53.57 57.14 57.14 60.71 60.71 64.28 64.28 56.06 15.5

Canon

Ltd

46.42 46.42 60.71 64.28 64.28 60.71 67.85 64.71 64.28 67.71 60.73 6

HDFC 39.28 50.00 50.00 53.57 60.71 60.71 64.28 60.71 60.71 64.28 56.42 13

INTEL

Ltd

39.28 39.28 57.14 53.57 64.28 57.14 60.71 53.57 67.85 67.85 56.06 15.5

Hero

Motor Ltd

53.57 32.14 28.57 46.42 57.14 42.85 67.85 60.71 60.71 57.14 50.71 21

Reliance I.

Ltd.

39.28 42.85 50.00 50.00 60.71 60.71 53.57 46.42 50.00 60.71 51.42 20

Tata

power

53.57 60.71 50.00 67.85 64.28 67.85 64.28 67.85 75.00 82.14 65.35 2

Reli.

Industy

39.28 39.28 57.14 67.85 64.28 64.28 71.42 67.85 67.85 67.85 60.70 7

Bajaj

Auto Ltd

39.28 46.42 57.14 67.85 67.85 64.28 60.71 67.85 71.42 71.42 61.42 5

Tech

Mahindra

35.71 42.85 57.14 60.71 67.85 64.28 67.85 67.85 57.14 67.85 58.92 9

INTERCONTINENTAL JOURNAL OF HUMAN RESOURCE RESEARCH REVIEWISSN: 2320-9704 - ONLINE ISSN:2347-1662 - PRINT IMPACT FACTOR:4.169VOLUME 5, ISSUE 12, DECEMBER 2017

An Open Access, Peer Reviewed, Refereed, Online and Print International Research Journalwww.icmrr.org 13 [email protected]

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Ultratech

Ltd.

35.71 39.28 46.42 53.57 60.71 64.28 67.85 64.28 67.85 64.28 56.42 13

Reli.

Power

42.85 42.85 50.00 50.00 64.28 60.71 60.71 53.57 64.28 64.28 55.35 17.5

TVS Ltd 35.71 39.28 35.71 46.42 60.71 60.71 64.28 67.85 57.14 64.28 53.20 19

Tata Ltd 39.28 42.85 60.71 53.57 60.71 57.14 64.28 60.71 57.14 57.14 55.35 17.5

JSW 46.42 46.42 42.85 57.14 60.71 57.14 60.71 64.28 64.28 64.28 56.42 13

Ranbaxy

Ltd

50.00 50.00 53.57 57.14 64.28 57.14 64.28 60.71 67.85 67.85 59.28 8

Maruti

Ltd

46.42 50.00 53.57 57.14 57.14 60.71 57.14 60.71 64.28 60.71 56.78 11

JK

Cement

35.71 35.71 39.28 46.42 50.00 53.57 57.14 53.57 53.57 57.14 48.21 22

Birla Ltd 46.42 50.00 60.71 60.71 64.28 57.14 57.14 64.28 57.14 60.71 57.85 10

Rolta Ltd 67.85 75.00 75.00 78.57 71.42 78.57 71.42 71.42 78.57 78.57 74.63 1

Apollo 42.85 42.85 60.71 60.71 64.28 75.00 67.85 67.85 71.42 71.42 62.49 4

Cipla Ltd 35.71 39.28 50.00 46.42 46.42 50.00 53.57 50.00 53.57 50.00 47.49 23

Jindal Ltd 35.71 35.71 35.71 50.00 46.42 46.42 50.00 50.00 53.57 64.28 46.78 24

Source: Developed from Annual Reports of Companies (2005-15).

Table 2 illustratesthe private sector companiesdisclose information in their financial reports but they deviate in this regard to each other. The HRADI average

score shows rank of Rolta Ltd is 1 with (74.63), Tata Power (65.35) with ranks 2 and Infosys (63.92) with rank 3 whereas it was found very low in case of IBM

Ltd. (44.63) and Jindal Ltd. (46.78). The range coefficient value between the largest score and smallest score is 25.15 per cent, which shows large dispersion in

disclosing human resource by public companies.

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Table 4-Test Statistics of Ranking for Disclosure of Public and Private Companies

Sr. no.

HR

AD

I

of

Publi

c

Com

pan

ie

s Ran

kin

g

Sr.

no.

HR

AD

I

of

Pri

vat

e

Com

pan

ie

s Ran

kin

g

1 78.92 1.00 26 63.92 10.00

2 75.35 2.00 27 45.63 50.00

3 53.20 38.50 28 56.06 29.50

4 52.13 40.00 29 60.73 17.00

5 64.38 9.00 30 56.42 27.00

6 67.14 7.00 31 56.06 29.50

7 70.35 4.00 32 50.71 43.00

8 69.64 5.00 33 51.42 41.00

9 68.21 6.00 34 65.35 8.00

10 60.35 19.00 35 60.70 18.00

11 49.28 45.00 36 61.42 15.50

12 57.13 24.00 37 58.92 22.00

13 54.99 34.50 38 56.42 27.00

14 47.49 47.50 39 55.35 32.00

15 55.35 32.00 40 53.20 38.50

16 54.28 36.00 41 55.35 32.00

17 59.28 20.50 42 56.42 27.00

18 49.63 44.00 43 59.28 20.50

19 51.41 42.00 44 56.78 25.00

20 53.92 37.00 45 48.21 46.00

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21 62.84 12.00 46 57.85 23.00

22 54.99 34.50 47 74.63 3.00

23 63.38 11.00 48 62.49 13.00

24 62.13 14.00 49 47.49 47.50

25 61.42 15.50 50 46.78 49.00

Total of Ranks ∑R1=581.00 Total of Ranks ∑R2=694.00

The test Statistic for Kruskal-Wallis H = 4.00, Critical Value of 𝜒2at 5.00 per cent=3.84.

It showed that ranking on the basis of Disclosure Index of public and private companies are significantly different, H = 4.00, p<.05.

Source: Developed from Annual Reports of Companies (2005-15).

More uneven the dispersion of ranks between independent groups, more the chances of is rejecting the null hypothesis. The rank on the basis of last ten years

score of public sectors companies is (∑R1=581) smaller than private sector companies (∑R2=694.00). The public sectors companies showmore information than

private sector companies because smaller rank means higher score of disclosure.

Variables-wise Analysis of Disclosure Trend

Selected companies are disclosing human resource information on different variables in their financial reportswhich are shown in table 5 and 6.

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Table 5-Variables-wise HRI Disclosure of Public Sector Companies (2005-2015)

Company

Variables BH

EL

SA

IL

HM

TL

ON

GC

OIL

BE

L

CC

I

EL

IL

PE

CL

GA

IL

BP

C

CR

L

NA

C

MR

L

HP

CL

CP

CL

SC

I

CC

I

HE

C

CS

L

NJM

C

NO

C

HC

L

PG

CI

NT

PC

Tota

l

Sco

re

RA

NK

No. of

Employees

10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 250 3

Cost of per

Employees 10 10 7 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10

247 6

Human

Capital

Investment

Ratio

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2

8

The Profit

Created by

each

Employee

4 0 5 5 9 5 7 6 5 4 0 3 4 4 6 4 4 3 4 4 0 4 6 6 6 108 2

0

Average

Salary of

each

Employees 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10

250 3

Employees

absenteeis

m rates 7 6 5 5 6 7 8 9 6 10 4 2 3 5 4 2 6 3 0 0 7 5 4 5 7

126 1

7

Loans and

Advances

to

employees 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 9 10 10 10 10 10 10 10

250 3

Amount

spent on

8 9 5 5 6 6 10 10 7 6 5 4 5 2 7 10 10 10 5 6 10 10 7 10 10 173 1

2

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employees

welfare

activities

Informatio

n on Labor

contracts 9 7 5 3 4 6 10 0 4 5 0 0 3 0 1 0 0 3 1 0 3 0 5 6 0

75 2

4

Strike and

lockouts 2 3 0 2 2 0 0 0 4 0 0 0 0 0 1 0 0 1 0 0 0 0 0 0 2

17 2

5

Employees

participatio

n in

Manageme

nt 9 10 4 6 8 7 10 10 9 8 5 10 7 3 3 10 10 5 4 10 7 6 7 5 10

183 1

1

Amount

spent on

HRD

programm

e 9 10 9 8 10 10 10 10 10 10 2 6 10 9 10 10 10 7 10 10 10 7 10 10 10

227 7.

5

Employees

pensions

and

retirement

benefits 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10

250 3

Employees

turnover

rate and

retention

rate

9 7 7 4 6 7 10 7 10 6 10 6 5 7 5 4 4 6 2 2 2 3 4 5 4 138 1

6

General 10 6 4 3 6 5 10 4 3 2 0 2 4 3 7 5 4 1 2 8 5 3 2 10 0 109 1

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statement

on

Industrial

relation

9

Occupatio

nal groups

of

employees 10 6 6 9 4 3 8 6 5 3 3 7 5 0 6 3 5 5 3 6 5 4 5 8 7

152 1

2

Work

safety and

health of

employees 10 10 10 7 9 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10

250 3

Informatio

n about top

level

employees

-

experience,

qualificatio

n, training

programm

e

10 10 10 1 9 10 6 10 8 5 5 10 5 4 10 8 7 5 8 10 10 10 10 5 10 196 1

0

Performan

ce

appraisal

of

employees 7 10 4 4 5 4 4 7 7 3 2 3 4 0 0 5 4 5 5 0 7 0 4 8 0

102 2

3

Job

satisfaction 0 0 0 0 1 0 0 0 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

6 2

6

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Source: Developed from Annual Reports of Companies (2005-15).

Promotion

and career

planning 10 9 6 10 9 10 10 10 10 10 7 7 6 8 10 4 8 0 7 8 10 10 6 6 10

201 3

Employees

Loyalty 4 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0

5 2

7

Manpower

planning 10 10 8 10 10 10 5 10 10 10 10 10 8 10 10 7 10 10 10 5 10 10 9 7 8

227 7.

5

Job

stability,

employees

rights,

motivation,

indirect

remunerati

on 9 7 8 6 6 10 3 10 4 3 1 3 5 0 4 4 6 3 8 10 10 10 6 6 10

149

1

5

separate

HRA

statement 8 7 0 0 7 8 6 9 9 7 4 2 7 10 10 10 10 5 9 10 10 5 8 5 0

166 1

3

category

wise

distributio

n 5 10 6 4 7 0 0 7 7 8 1 7 6 5 0 0 2 5 5 2 4 7 5 1 0

104 2

2

discount

rate

applied 10 10 0 3 2 10 10 6 5 6 10 5 2 0 0 8 6 2 0 0 6 0 9 5 9

124 1

8

valuation

model used 10 10 0 1 4 10 10 5 6 5 10 4 6 0 0 0 3 0 0 0 0 0 9 5 9

107 2

1

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Table 6-Variables-wise HRI Disclosure of Private Sector Companies (2005-2015)

Company

Variables

Info

sys

IBM

ICIC

I

Can

on

HD

FC

INT

EL

H

ero

Moto

r

ltd

R

el.

Infr

a. lt

d

Tata

pow

er

Rel

. IN

D.

Baja

j

Au

to

Tea

ch.

M.

Ult

rate

ch

Rel

.

pow

er

TV

S

TA

TA

Ch

.

JS

W

Ran

baxy

Maru

ti

ltd

J.K

.

Cem

ent

Bir

la

Rolt

a

Ap

oll

o

Cip

la

Jin

dal

Tota

l

Sco

re

RA

NK

No. of Employees 10 1

0

10 10 10 1

0

10 10 10 10 10 10 1

0

10 10 10 10 1

0

10 1

0

1

0

10 1

0

1

0

1

0

25

0

4

Cost of per Employees 10 1

0 10 10 10

1

0 10 10 10 10 10 10 8 10 10 10 10

1

0 10

1

0

1

0 10

1

0

1

0

1

0

24

8 9

Human Capital Investment Ratio 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 26.

5

The Profit Created by each

Employee 0 0 0 0 0 0 0 0 0 0 0 0 0 5 5 0 0 0 0 0 0 0 0 0 0 0

26.

5

Average Salary of each

Employees 10

1

0 10 10 10

1

0 10 10 10 10 10 10

1

0 10 10 10 10

1

0 10

1

0

1

0 10

1

0

1

0

1

0

25

0 4

Employees absenteeism rates 5 5 7 8 9 5 1 1 4 8 5 7 3 1 7 8 10 4 7 7 1

0 10 8 8 6

15

6 14

Loans and Advances to

employees 10

1

0 10 10 10

1

0 10 10 10 10 10 10

1

0 10 10 10 10

1

0 10

1

0

1

0 10

1

0

1

0

1

0

25

0 4

Amount spent on employees

welfare activities 10

1

0 10 10 10

1

0 10 10 10 10 10 10

1

0 10 10 10 10

1

0 10

1

0

1

0 10

1

0

1

0

1

0

25

0 4

Information on Labor contracts 0 0 0 0 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 24

Strike and lockouts 3 3 0 0 0 3 4 1 4 2 0 0 1 0 1 4 0 1 3 2 7 0 1 0 0 40 21

Employees participation in

Management 8 8 4 10 7 8 4 6 6 7 7 5 7 4 5 2 5

1

0 0 0 0 8 7 4 1

13

3 16

Amount spent on HRD

programme 6 6 4 8 0 6 7 10 10 8 9 6

1

0 6 10 6 4 6 10 5

1

0 7 8 0 1

16

3 13

Employees pensions and 10 1 10 10 10 1 10 10 10 10 10 10 1 10 10 10 10 1 10 1 1 10 1 1 1 25 4

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retirement benefits 0 0 0 0 0 0 0 0 0 0

Employees turnover rate and

retention rate 4 4 6 0 8 4 0 2 9 8 5 8 7 10 4 8 7 5 10

1

0 7 10 5 7 6

15

4 15

General statement on Industrial

relation 4 4 0 0 0 4 5 6 8 8 7 4 4 0 0 5 6 0 0 7

1

0 7 7 0 0 96 20

Occupational groups of

employees 0 0 9 8 6 0 3 6 9 6 10 8 3 3 5 0 1 6 2 0 0 8

1

0 0 1

10

4 18

Work safety and health of

employees 10

1

0 10 10 10

1

0 9 10 10 10 10 10

1

0 10 10 10 10

1

0 10

1

0

1

0 10

1

0

1

0

1

0

24

9 8

Information about top level

employees- experience,

qualification, training

programme

10 1

0 10 10 10

1

0 10 10 10 10 10 10

1

0 10 10 10 10

1

0 10

1

0

1

0 10

1

0

1

0

1

0

25

0 4

Performance appraisal of

employees 4 4 0 7 0 4 5 5 9 0 8 7 6 0 3 0 0 6 1 0 3 10 4 8 7

10

1 19

Job satisfaction 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 26.

5

Promotion and career planning 10 1

0 10 10 10

1

0 4 2 8 10 10 7

1

0 10 4 10 10

1

0 10 1 3 10

1

0 9

1

0

20

8 11

Employees Loyalty 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 26.

5

Manpower planning 10 1

0 10 10 10

1

0 7 6 10 10 7 10

1

0 10 7 10 8

1

0 10 6 5 9

1

0 7 3

21

5 4

Job stability, employees rights,

motivation, indirect

remuneration

10 1

0 10 10 10

1

0 8 10 10 10 10 10

1

0 10 10 10 9

1

0 10

1

0

1

0 10

1

0

1

0

1

0

25

0 4

separate HRA statement 0 0 0 0 0 0 3 2 0 0 8 5 0 0 0 0 1 0 0 0 0 10 0 0 0 29 22

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categorized wise distribution 5 5 7 10 7 5 3 0 6 7 4 6 4 8 2 5 7 8 8 0 6 10 7 0 0 13

0 17

discount rate applied 8 8 10 6 9 8 7 6 8 6 2 0 6 8 7 8 10 1

0 8 7

1

0 10 8 0 7

17

7 12

valuation model used 6 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 10 0 0 0 17 23

Source: Developed from Annual Reports of Companies (2005-15).

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In table 5, rank 1(score=3) is given to variables,number of employees, average salary of each

employees, work safety and health of employees, employees’ pension and retirement benefits,

loans and advances to employees, each company shows information since last ten year. On

the other side, it is found that no one company has disclosed information about human capital

investment ratio. Further, it is elicited that Job satisfaction, employees’ loyalty, strike and

lockouts, information on labour contracts disclosed by few companies. Which implies that

disclosing information pattern of human resource variate from company to company in public

sector?

In table 6, rank 1(score = 4) is given to variables, number. of employees, average salary of

each employee, loans and advances to employees, amount spent on employee welfare

activities, employees pension and retirement benefits, information about top level employees’

experience, qualification and training programme, job stability, employee’s rights, motivation,

indirect remuneration, each company is showing regularly information regularly since last ten

year. On the other side, it is found that no one company has disclosed information about

human capital investment ratio, profit created by each employee,job satisfaction and

employees loyalty.

Table 7- Variable-Wise Human Resource Information Disclosure Practices Score Gap of

Public Sector and Private Sector Companies

Sr.

no.

Variable Total score

(public

Sector)

Total Score

(Private

Sector)

Gap

A Variable with Mild Gap in HR

Information Disclosure

1 No. of Employee 250 250 0

2 Cost of per Employee 247 248 1

3 Average Salary of each Employees 250 250 0

4 Loans and Advances to employees 250 250 0

5 Employees pension and retirement

benefits

250 250

0

6 Work safety and health of employees 250 249 1

7 Promotion and career planning 201 208 7

8 Manpower planning 227 215 12

9 Performance appraisal of employees 102 101 1

Average of Gaps 2.22

B Variable with Severe Gap in HR

Information Disclosure

1 The Profit Created by each employee 108 0 108

2 Information on Labour contracts 75 2 73

3 Separate HRA statement 166 29 137

4 valuation model used 107 17 90

5 Amount spent on employees welfare

activities

173 250 77

6 Employees participation in management 183 133 50

7 Amount spent on HRD programme 227 163 64

8 Job stability, employees rights,

motivation, and indirect remuneration

149 250 101

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9 Discount rate applied 124 177 53

10 Occupational groups of employees 152 104 48

11 Information about top level employees-

experience, qualification, training

programme

196 250 54

Average of Gaps 77.72

C Variable with Normal Gap in HR

Information Disclosure

1 Employees absenteeism rate 126 156 30

2 Strike and lockouts 17 40 23

3 Employees turnover rate and retention

rate

138 154 16

4 General statement on industrial relation 109 96 13

5 Job satisfaction 6 0 6

6 Employees loyalty 5 0 5

7 Category wise distribution 104 130 26

Average of Gaps 17.00

D Variable with negligible in HR Information Disclosure

1 Human capital investment ratio 0 0 0

Source: Developed from Annual Reports of Companies (2005-15).

In table 7, variable-wise score of human resource of both public and private sectors is

categories as mild, severe and normal gap containing variables. Categorization shows that

average gap of the mild category variables is 2.22, severe gap variables 77.72 and average of

normal gap variables is 17.00. But no information is disclosed about human capital

investment ratio by companies of both sectors.

2. CONCLUSIONS AND SUGGESTIONS

The range coefficient value between the largest score and smallest score is 25.15 and 24.90

per cent public and private sector companies respectively.While thedispersion of all the ranks

were found more uneven.

When the disclosurehas examined by dividing the variables in mild, severe and normal

categories it has been found that variables (11) which are strategic have severe gaps in

disclosure in annual financial reports. This study shows mixed results different from the

results shown by 20 studies reviewed.

Based on the findings, it is suggested that variables should be identified and may be

standardized for harmonization in information disclosure practices so that dispersion may be

minimized. Both sectors should clearly disclose model used for evaluation of HR. It is also

suggested that separate HRA statement should be disclosed by private sector firms so that

execution of government policies for welfare to employees may be examined and investors

may be able to uncover the best opportunities for their investments.

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