Emerging human capital analytics for investment processes
| DOI | https://doi.org/10.1108/14691930810891983 |
| Published date | 25 July 2008 |
| Pages | 367-379 |
| Date | 25 July 2008 |
| Author | Carol Royal,Loretta O'Donnell |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
Emerging human capital analytics
for investment processes
Carol Royal
Faculty of Commerce and Economics, School of Organisation and Management,
University of New South Wales, Sydney, Australia, and
Loretta O’Donnell
Macquarie Graduate School of Management, Macquarie University,
Sydney, Australia
Abstract
Purpose – The purpose of this paper is to respond to the increasing pressure on financial markets to
more systematically value the intangible assets in listed firms.
Design/methodology/approach – Using qualitative research techniques on the trading floor of
Merrill Lynch Investment Bank in Sydney and Hong Kong, four tools for human capital analysis have
been developed by the authors.
Findings – These tools provide mechanisms for securities analysts to more systematically analyse
the intangible aspects of publicly listed firms on global stock exchanges.
Research limitations/implications – Given the complex regulatory requirements on securities
analysts in many developed economies, these tools are predicated on analysts using publicly available
information.
Originality/value – Specifically, the tools use a systems approach andcan assist securities analysts
to be more systematic in their analysis of management quality of publicly listed companies, as it is
manifested in a firm’s management systems.
Keywords Human capital, Financial markets, Intangibleassets, Financial institutions,Australia,
Hong Kong
Paper type Research paper
1. Pressures for clearer intangibles analysis in the investment community
Changes in the pressures on the finance industry to move beyond the trend to
commoditization in their products and services have generated a need for superior
intangibles analysis. High profile corporate collapses, such as Enron in the USA and
HIH in Australia, have generated pressure on professional observers of the financial
markets to provide clearer lead indicators of financial performance of listed firms. In
addition, the Australian regulatory regime encourages a relatively high proportion of
superannuation monies to be invested either directly or indirectly into the share
market, creating both opportunities and threats for retail investors.
At the same time, many human capital metrics, such as might be derived from the
Kaplan and Norton (1996) style of The Balanced Scorecard or Strategy Maps (Kaplan
and Norton, 2004) cannot be systematically adopted by analysts and fund managers
without breaching regulatory boundaries, since those metrics rely on an in-depth
understanding of an organisation which could only be gained by access to privileged
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1469-1930.htm
The authors are grateful to the ongoing collaboration of Dr Farhad Daneshgar from the School of
Information Systems, UNSW.
Emerging
human capital
analytics
367
Journal of Intellectual Capital
Vol. 9 No. 3, 2008
pp. 367-379
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930810891983
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