Abstract:
Abstract
High volatility and decline in firm value has been spotted for listed companies in Kenya as
revealed by large deviations between market-to-book value ratios. This has prompted
organisations to adopt integrated reporting to enhance accounting information disclosures that
has long been linked with firm value. However, studies examining this form of reporting and its
contribution to the value of the company and its variant stakeholders remain scanty in the context
of Africa. The purpose of this research is to investigate and demonstrate the relationship amongst
human capital disclosure, business model and value of listed companies in Kenya and South
Africa. The study was braced on the Stakeholder and legitimacy theories. The research design
was both exploratory and confirmatory. Secondary data was collected from 137 purposefully
selected companies for the period 2018-2020. An unweighted disclosure index was used to
measure human capital disclosure, whilst, firm value was measured using Tobin’s Q ratio.
Frequency tables were used for data presentation and descriptive statistics was conducted to
summarize and describe the data. Pearson correlation analysis was used in measuring the
strength and direction of relationships between variables, while, stepwise regression analysis
method was applied in testing for mediation effects. The results depict that human capital
disclosure has a statistically significant effect on firm value. However, the effect was negative
for Kenya and South Africa revealed a positive effect. Human capital disclosure and business
model evinced a positive and significant relationship. Human capital transmitted part of its effect
on firm value through the entity business model, with Kenyan listed firms revealing inconsistent
mediation, whereas, South African companies reported full/complete mediation. The study
recommends mandatory disclosures of human capital and business model aspects of integrated
reporting by Kenyan listed companies due to its effect on firm value.
