The Accounting and Finance Investigation on Human Capital

Abstract

This paper aims to reexamine human capital from the perspective of accounting and finance. To this end, firstly, the paper clarifies the concept of human capital accounting and explicitly distinguishes “human assets” from “employee equity” on the balance sheet (BS). Secondly, it discusses an example of human assets recorded in the BS. The “player’s registration right” of a soccer team is an example of a human asset measured on an individual basis. As for human assets measured by an organization,“ development assets” in R&D activities are discussed. Lastly, turning to the credit side of the BS, the paper introduces the concepts of multistakeholder BS, “employee cost of capital” and the multi-stakeholder weighted average cost of capital (WACC) and presents an image of a future company.