📄 Abstract
Human capital is the largest unrecognised asset on most balance sheets, and until recently firms decided for themselves how much of it to describe. India's transition to mandatory sustainability reporting offers an unusually clean setting in which to ask what that description is worth. This study constructs a 42-item Human Capital Disclosure Index for 428 listed Indian firms across 2,996 firm-years spanning 2019–20 to 2025–26, and estimates the valuation effect of disclosure under the voluntary regime, around two regime-tightening events, and under projected standardised regimes. Two findings dominate. First, the market reaction to mandate is almost entirely cross-sectional rather than aggregate: the eleven-day cumulative abnormal return averaged +0.09 per cent across all firms at the BRSR announcement of 10 May 2021 and −0.06 per cent at the BRSR Core assurance circular of 12 July 2023, yet the spread between the highest and lowest pre-event disclosure quartiles was +3.62 and +4.61 percentage points respectively, both significant beyond the one per cent level. Mandate does not create value in aggregate; it reallocates it from firms that had been withholding to firms that had already told. Second, the valuation premium to disclosure decays as disclosure becomes universal, falling from 5.2 per cent per ten index points under the voluntary regime to 3.1 per cent afterwards, a decline of 40.4 per cent, as the separating equilibrium that made disclosure informative collapses into a pooling one. The decay is not a loss to the market as a whole: the implied cost of equity falls across every quartile and by most where disclosure was weakest, compressing the high-to-low spread from 1.98 to 1.62 percentage points, and a fully standardised regime is projected to raise capitalised firm-sector value by 7.7 per cent relative to the voluntary baseline. The private incentive to resist mandatory human capital reporting and the collective benefit of adopting it therefore point in opposite directions.
🏷️ Keywords
📚 How to Cite:
Dr. N Subbukrishna Sastry, Dr. Manjula Mallya M , HUMAN CAPITAL DISCLOSURE PRACTICE AND FIRM MARKET VALUATION: EVENT-STUDY EVIDENCE FROM INDIA'S MANDATORY REPORTING TRANSITION AND A PROJECTION OF STANDARDISED REGIMES , Volume 12 , Issue 9, September 2026, International Journal of Global Economic Light (JGEL) , Pages: 27 - 41 ,