The Role of Corporate Boards in Employee Engagement

--Susan S Lightle, Joseph Castellano, Bud Baker and Robert J Sweeney

This paper highlights the growing recognition of the importance of employee engagement, and as that recognition increases, employee engagement needs to be recognized as a legitimate area of interest for boards of directors. After summarizing the increasingly understood connection between employee engagement and bottom line organizational performance, the authors contend that board members should— indeed must—make employee engagement a focus of their corporate governance duties. After showing evidence that the financial health and viability of firms are directly impacted by employee engagement, the study shows that boards have a duty to ensure that the top management makes such engagement a priority, just as they would require the management to protect the financial resources of the organization. The paper concludes that failing to do so is to ignore the demonstrated connections between employee engagement and the financial performance of the firm. The paper begins with the two accepted ideas of increased recognition of the importance of employee engagement and the long established fiduciary responsibility of boards of directors. It then blends these ideas in a fresh way and concludes with a brief anecdotal example from the healthcare industry.

© 2015 IUP. All Rights Reserved.

The Impact of Board Characteristics on Corporate Governance
and Disclosure Practices of Firms Listed in Indian Stock Exchange

--Pankaj M Madhani

The study of internal corporate governance mechanisms such as board characteristics plays a crucial role in explaining the variations in corporate governance and disclosure practices across firms. The effectiveness of such corporate governance mechanism in maintaining healthy relationship between the management and the shareholders depends significantly on board effectiveness. Two major attributes that affect a board’s effectiveness are board size and its composition. Board size refers to the total number of directors who sit on the board of a company, while board composition refers to the type of directors on the board. This paper focuses on this aspect and identifies the relationship between board characteristics, i.e., board size and board composition and corporate governance and disclosure practices of firms listed in the Bombay Stock Exchange (BSE).

© 2015 IUP. All Rights Reserved.

Voluntary Disclosure of Human Capital: Evidence from India

--Sanjay Kumar Mishra, Arti Devi and Archana Gupta

Human capital has emerged as an important source of sustainable competitive advantage in the knowledge-based economy. However, due to the dominance of financial and accounting conventions, corporate public reporting is limited in capturing information on human capital. The objective of the present study is to investigate the human capital disclosure phenomenon in the case of Indian firms with specific reference to Nifty 50 companies. Based on the findings of the study, 11 distinct themes related to the human capital disclosure practices of Indian companies have emerged. Amongst those themes, ‘employee compensation and benefit’ is found to be the most reported content of human capital disclosure, followed by ‘training and development’, while ‘work place safety initiative’ is found to be the least reported content of human capital disclosure. The analysis of Human Capital Disclosure Index (HCDI) score of the Nifty companies revealed that computer and software industry has the highest average HCDI score, followed by banks and pharmaceutical industry. The study observed a wide discrepancy in human capital disclosure practices based on the industry-level data. The findings also reveal that ‘employee expense as a proportion of its total operating expense’ has a significant positive impact on HCDI. Also, there is no significant impact of human capital disclosure on the market value of the companies. The implications of the study for practitioners and policy makers are also discussed.

© 2015 IUP. All Rights Reserved.