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Lim, Hyoung Joo, Mali, Dafydd 
ORCID: https://orcid.org/0000-0003-3582-2429, Attah-Boakye, Rexford and Adams, Kweku
(2024)
An analysis of the effect of employee tenure on WACC.
Accounting Forum.
ISSN 0155-9982
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Abstract
No international accounting policy exists to mandate that firms must report employee/workforce-level human capital information on a structured basis. Thus, the link between employee/workforce human capital and firm risk is not demonstrated in the literature. South Korea is a rare instance where human capital information, such as employee tenure is disclosed on Annual Reports as a rule. Therefore, we invoke resource-based theory, a human resource policy assertion, and a business ethics/sustainability inference to show whether capital providers differentiate between firms that are able/unable to retain employees, thus adjusting WACC accordingly. Using OLS regression analysis, from 2011-2020, empirical results show that firms with the ability to retain employees enjoy economically significantly lower levels of WACC. The results infer that equity/debt providers associate workforce tenure and firm risk/returns expectations. Empirical results also show that capital providers are nuanced when impounding employment information into risk/return assessments, based on incrementally different associations for investment-grade/non-investment-grade firms. The study contributes to the literature by providing evidence that management should develop strategies to retain employees to enjoy economic advantages. Because structured employee/workforce human capital information is rare internationally, the study has important practical implications for legislators, management, employees and the public.
| Item Type: | Article |
|---|---|
| Additional Information: | A correction for this article is available at: https://www.tandfonline.com/doi/epub/10.1080/01559982.2024.2375683. This corrects the order of the authors on the paper only. |
| Uncontrolled Keywords: | employee tenure,financial reporting transparency,human capital,wacc,accounting,finance ,/dk/atira/pure/subjectarea/asjc/1400/1402 |
| Faculty \ School: | Faculty of Social Sciences > Norwich Business School |
| Related URLs: | |
| Depositing User: | LivePure Connector |
| Date Deposited: | 28 Aug 2024 11:30 |
| Last Modified: | 25 Sep 2024 18:03 |
| URI: | https://ueaeprints.uea.ac.uk/id/eprint/96372 |
| DOI: | 10.1080/01559982.2024.2352671 |
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