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Accounting for Investments in Human Capital: A Review
Author(s) -
Wyatt Anne,
Frick Hermann
Publication year - 2010
Publication title -
australian accounting review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.551
H-Index - 36
eISSN - 1835-2561
pISSN - 1035-6908
DOI - 10.1111/j.1835-2561.2010.00104.x
Subject(s) - human capital , incentive , investment (military) , accounting , capital budgeting , business , voluntary disclosure , economics , investment decisions , cost of capital , capital (architecture) , finance , microeconomics , market economy , archaeology , behavioral economics , politics , project appraisal , political science , law , history
This paper provides an overview of the human capital literature, focusing on the firm's incentives and disincentives to invest in human capital and subsequently to account for the investments. The evidence suggests human capital investment decisions are intrinsically linked to the success of a business and ultimately to the probability of survival. However, disclosure is largely a voluntary choice by managers as there are few formal disclosure requirements. The conclusion from the evidence shows that the benefits to stakeholders of disclosing information relating to human capital investment are likely to outweigh the costs and suggests a wide range of topics for future research.