Human Capital Disclosure and Workforce Turnover

Abstract

Human capital is a primary source of value in modern firms, yet little is known about what employee information firms disclose and whether it is timely and informative. We examine the determinants of firms' human capital disclosures by combining textual analysis with a proprietary dataset on 45 million individual career histories. We show that human capital disclosures respond to changes in the underlying stock and flow of employees, suggesting changes in disclosure are informative. Two SEC rule changes that encourage but do not require specific human capital information elicit greater disclosures, especially from firms that previously under-disclosed workforce information.

Keywords: Human capital, employee turnover, competition, SEC disclosure regulation, textual analysis

JEL Classification: G38, J60, M41, M48