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The HRM-Capital-Market Link : effects of securities analysts on strategic human capital

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Krausert, Achim (2018) The HRM-Capital-Market Link : effects of securities analysts on strategic human capital. Human Resource Management, 57 (1). pp. 97-110. doi:10.1002/hrm.21841 ISSN 0090-4848.

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Official URL: https://doi.org/10.1002/hrm.21841

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Abstract

This article develops theory about an agency problem affecting the strategic human capital (SHC) of the firm. It proposes three categories of SHC-related choices managers must make that imply a trade-off between near- and long-term performance. Dispersed shareholding, firm coverage by securities analysts, and their practice of publishing quarterly earnings forecasts are argued to entail a bias in management incentives, shifting the balance in this trade-off toward near-term performance. To restore the balance, securities analysts would need to distinguish transitory from recurring effects of SHC-related choices in their valuation models (e.g., treating certain labor cost savings during cyclical downturns as transitory). Restoring the balance would also require them to anticipate long-term effects in their long-term earnings forecasts (e.g., long-term positive effects of retaining employees with valuable skills during cyclical downturns). The article discusses specific transitory cost effects and long-term effects they could potentially take into account. The skills and incentives needed by analysts to account for such effects are argued to vary across firm segments.

Item Type: Journal Article
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: Faculty of Social Sciences > Warwick Business School
Library of Congress Subject Headings (LCSH): Human capital , Human capital--Management, Strategic planning, Corporate governance
Journal or Publication Title: Human Resource Management
Publisher: John Wiley & Sons, Inc.
ISSN: 0090-4848
Official Date: January 2018
Dates:
DateEvent
January 2018Published
22 September 2017Available
4 August 2016Accepted
Volume: 57
Number: 1
Page Range: pp. 97-110
DOI: 10.1002/hrm.21841
Status: Peer Reviewed
Publication Status: Published
Access rights to Published version: Open Access (Creative Commons)
Date of first compliant deposit: 4 October 2016
Date of first compliant Open Access: 22 September 2019

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