Corporate governance characteristics, financial characteristics and HR practices disclosures: an Indian scenario

Many Indian firms are proactively adopting and disclosing newer human resources (HR) practices to attract and retain best HR for the success of their business operations. The research questions of this study are: (a) Have human resources practices disclosures (HRPD) of Indian listed firms evolved over time? (b) What newer HR practices are being adopted and disclosed by Indian listed firms? (c) What are firm-level drivers of HRPD of Indian listed firms? Initially, through content analysis of HRPD of 160 listed non-financial Indian firms, this study developed a 35-itemed comprehensive HRPD index (HRPDI). It was found that Indian firms’ HRPD have indeed evolved over time. Further, the regression analysis results depicted that firms that are larger, older, have effective audit committees and the big four as external auditors tend to have higher levels of HRPD. The regression analysis also revealed a surprising result that Indian firms with higher external financing needs tend to have lower level of HRPD. The authors explained the above surprising result in terms of inherent conflict of interests between the firm’s finance department and the HR department. While the firm’s HR department views expenses incurred to adopt and disclose HR practices as the necessary investment to attract and retain best HR for the organization, the finance department views such expenses as discretionary costs, which must be curtailed when needed. Therefore, firms in need of external financing would try to minimize their expenses by curtailing on adoption and disclosure of HR practices.