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On the Existence of Unrecorded Human Assets: An Economic Prespective

David A. Dittman; Hervey A. Juris; Lawrence Revsine
Journal of Accounting Research 1976 14(1), 49
Increasingly, attention is being focused on the usefulness of manpower information systems in the firm. The demand for this information emanates from three distinct levels. Level I: Manpower Information for Legal Compliance Decisions. The primary focus here is in developing information systems which provide necessary data for governmental units such as the Department of Health, Education, and Welfare, the Equal Employment Opportunity Commission, the Social Security Administration, and similar organizations which monitor employment practices, collect taxes, or engage in policy-making activities. Level 1I: Manpower Information as an Input to Manpower Planning. In this area, the objective is to provide management with data to be used in making numerous decisions regarding the allocation and pricing of human resources including recruitment, training, utilization, and termination. Level III: Manpower Information as an Input to the Valuation of Human Assets for External Reporting. Here, the objective is to provide independent information in the basic financial reports regarding heretofore unreported human assets possessed by the entity. While the accounting literature on human resources has dealt with all three levels of manpower information systems (e.g., see Picur [1973] and Flamholtz [1974]), most authors have given only cursory attention to the basic economic foundation underlying the existence of unrecorded human assets. Our purpose in this paper is to explore the economic and accounting assumptions underlying this literature and to develop criteria for the employee training conditions under which such assets might exist. In the economic literature, there already exists a reasonably well de-

Corporate Forecasts of Earnings Per Share and Stock Price Behavior: Empirical Test

James M. Patell
Journal of Accounting Research 1976 14(2), 246
The disclosure of corporate forecasts of projected annual earnings was a topic of intensive debate within the investment community during the years 1970-75. Questions of accuracy, objectivity, independent certification, and investment utility were examined from a number of theoretic and pragmatic viewpoints.' Most of these inquiries appear to assume that an investor's beliefs and/or actions may be affected by the disclosure of a management forecast, and several explore the possible rewards and sanctions that a firm may experience as a result of forecast accuracy. The purpose of this study is to test the hypothesized information content of management forecasts through the examination of the common stock price behavior which accompanied the voluntary disclosure of 336 forecasts of annual earnings per share during the years 1963-67. The results reported here indicate that these forecast disclosures were accompanied by significant price adjustments, from which the inference may be drawn that either the data presented in a management forecast, the act of voluntary disclosure, or both, convey information to investors.