HUMAN RESOURCES ACCOUNTING DISCLOSURE PRACTICES IN INDIA: AN EMPIRICAL STUDY ON ITS IMPACT ON ORGANISATIONAL PERFORMANCE

Accounting for human resources (HRA) has still not been made mandatory in India and consequently, the extent of its disclosure is not apparent. However, the increased disclosure requirements globally as per Global Reporting Initiative (GRI) or the SEBI mandated “Business Responsibility and Sustainability Report” (BRSR) in India may have resulted in increased disclosures for HRA also. This paper seeks to examine the extent of disclosure practices by Indian companies of their human resources and analyzeits impact on profitability. The study has measured HRA in terms of the disclosure index, (calculated using sixteen indicators adopted insome prior studies), employee training expense, number of employees and their incremental salaries. Profitability has been defined in terms of return on total assets. Using secondary data from CMIEprowess, and in-depth study of annual reports of each company, the analysis was carried on a sample of 39 BSE listed companies whose required disclosure data was available in their respective annual reports for the last4 years. The results revealed that extent of disclosure has increased over the last few years owing to the mandatory SEBI requirement of BRSR statements. Further, the empirical results preferred the random model but none of the independent variables significantly impact ROA in either the fixed or random effects models highlighting the challenges in identifying robust predictors of firm profitability in panel data settings, especially when firm-specific characteristics do not seem to play a dominant role in explaining variations in financial performance.