Human Capital Disclosure Practices: Comparative Study of Banking, Insurance and Finance Industries in Sri Lanka.

Abstract

In an organizational context, human capital is the most valuable capital compared with other resources such as physical, financial and informational and disclosure of those assets in the financial statements have become the key differentiating agent among players in the same industry. The objective of this study is to identify the human capital voluntary reporting trend in banking, insurance and finance sector companies in Sri Lanka. The study is based on secondary data and collected from published annual reports of the selected banking insurance and finance companies over the period of 2010 and 2015. The sample consists of 25 licensed commercial banks, 31 finance companies and 9 insurance companies which were listed in Colombo Stock Exchange in 2011/2012 and 2015/2016. Content analysis method was adapted to analyze the data recorded using human capital disclosure framework identified through literature. The findings indicated that the most of the companies concern on safe the working environment for their employees such as employee-related regulatory framework, their policies and safety works. More disclosure related to the quality and skills of the staff recruitment policy also can be seen. Employee-related measurement was the most reported sub component in human capital over the selected time horizon by the sector and employee relation, training and development were the next highest reported subcomponents. However findings also revealed that human capital reporting trends in annual reports are still unorganized and unsystematic due to a lack of proper disclosure framework and a consistent approach for reporting human capital. Findings also revealed that lack of usage and disclosure on human capital valuation measurements in annual reports. Therefore it suggests establishing a harmonized standards and guidelines to guide companies for proper measurement, management and reporting human assets.