For many investors, the SEC's November 2020 human capital disclosure requirement didn't require enough. The rule allows companies to choose what workforce costs, wellness, diversity and retention details - among other human capital data - to share, providing substantial managerial discretion. Human capital has become a major financial performance predictor, especially amidst a tight labor market. On average, labor expenses make up 57% of operating costs at S&P 500 companies, according to MyLogIQ. High turnover rates can also indicate poor management or a lack of business agility. In competitive markets shareholders worry that companies might subvert workforce risks without stricter SEC regulations. But a new study by 3 Vanderbilt professors may allay these fears. It examines human capital disclosures over 20 years, finding most companies reveal risk in good faith and that prior SEC rule changes made a significant impact.
How Much is Great Resignation Costing Companies?
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