Research

Abstract: Although firms often describe employees as their most valuable asset, financial reporting provides little consistent or comparable workforce information. This study investigates whether the lack of information concerning the firm's workforce implies that financial reporting is less informative for assessing firm risk when the firm is more dependent on labor, and whether enhanced human capital information in financial reporting can improve the prediction of firm survival. Using comprehensive Danish employer-employee registry data from 2002 to 2019, I develop and implement a model to empirically estimate firms' reliance on human capital. Then, I exploit a shock to lenders' information acquisition costs–the 2009 introduction of digital retrieval of financial reports from the Danish Business Authority’s central data repository–to examine whether increased availability of financial reporting information reduces firms' cost of debt and whether this effect is greater for firms that depend less on human capital. I find a statistically significant reduction in interest rates in the post-period. Consistent with my hypothesis, I find that this effect is significantly higher for firms that are less dependent on human capital. Finally, I demonstrate that incorporating human capital information into accounting-based bankruptcy prediction models significantly improves out-of-sample predictive performance. Overall, the findings suggest that financial reporting is less informative for firms with a greater dependence on human capital, and that additional human capital information can meaningfully improve financial statement users’ ability to assess firm risk.

Keywords: Human Capital, Intangibles, Cost of Debt, Information Processing Costs, Bankruptcy Prediction

Presented at: Copenhagen Business School and the Emerging Scholars in Accounting Conference 2025.

Available upon request.

Abstract: This study examines the influence of mandatory ESG disclosure on ESG-oriented investors’ investment decisions. Despite the increasing prevalence of mandatory ESG disclosures, the literature on investors' integration of ESG disclosures in the investment process presents mixed findings. This study contributes to the literature by analyzing the impact of the 2020 US human capital disclosure mandate on the investment decisions of Human Capital Management Coalition (HCMC) members. The findings indicate that higher-quality human capital disclosures lead to incrementally increased investments from HCMC members, whereas lower-quality disclosures result in incrementally reduced investments. Furthermore, changes in HCMC members’ portfolio allocations following the mandate negatively correlate with future workforce-related public enforcement actions, suggesting that mandatory disclosure enhances the alignment between investors' ESG preferences and firms' ESG performance.

Keywords: Institutional Investors, ESG, Human Capital, Mandatory Disclosures, Textual Analysis, Boilerplate

Presented at: Copenhagen Business School, Hawaii Accounting Research Conference 2023, Nordic Accounting Conference 2023, EAA Doctoral Colloquium 2024, EAA Annual Congress 2024,2025, JIAR annual conference 2025, and AAA annual meeting 2025.

Full paper available on SSRN
Additional material available here 

Abstract: We explore how regulation aimed at increasing financial transparency influences labor market outcomes by analyzing a 2013 Danish mandate requiring limited liability firms to submit financial statements in XBRL format. This reform catalyzed the rise of information intermediaries accessing and disseminating firm-level financials at scale, hence lowering information processing costs for unsophisticated users. Using economy-wide matched employer-employee data and a difference-in-differences design — with unlimited liability firms exempt from the mandate as a control group — we find that the regulation led to a statistically and economically significant increase in employee wages: approximately 1.0 percentage point. However, the effect appears driven not by direct employee use of financials, but by managerial preemption of anticipated wage demands. Our results align with theories of compensating wage differentials when disclosures reveal poor financial health, and rent-sharing when earnings exceed the zero-earnings benchmark. These results underscore how financial reporting regulation can influence dynamics with key non-investor stakeholders.

Keywords:  Financial reporting, Labor, Rent-sharing, Compensating wage differentials, XBRL reporting.

Presented at: Copenhagen Business School and ABR-Fudan joint conference 2025.

Full paper available on SSRN
Additional material available here