An exploration study of voluntary human capital disclosure practices in South Africa

Abstract

This study concerns the increasing importance of voluntary disclosures in South African annual reports in order to enable better investor decision-making. As intangible assets play an ever more important role in companies' value-creating process, it has become more important to communicate these "hiddenn assets to external stakeholders. As the traditional financial accounting standards are insufficient to capture and communicate the value of intangibles, companies are encouraged to use voluntary disclosure to incorporate transparency with regards to human capital. In this study companies listed on the Johannesburg Stock Exchange (JSE) have been explored. The study is limited to human capital disclosure by examining what type of human capital information is presented in annual reports. The study has shown that voluntary disclosure practices in South Africa are very strongly driven by legislative requirements. Very little comparison exists among disclosures of companies in different sectors. This indicates the need for a standardised measure for the reporting of human capital.