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Introduction
Human resources (HRs) are one of the key resources of an organization that is occupying a position of increasing importance in the current business environment. The literature identifies HR as a primary driver in creating firm value ([21] O'Donnell and Berkery, 2003; [22] O'Regan et al. , 2001; [30] Wright and Snell, 2005; [31] Youndt et al. , 1996). Hence, there is an increasing interest in the measurement, management and reporting of this key resource ([5] Ax and Marton, 2008; [9] Chaudhry and Roomi, 2010; [29] Verma and Dewe, 2008). For instance, [29] Verma and Dewe (2008) suggested that managing, measuring and reporting of HR provide needed information about the people resources in the organization and whether the people resources are there to support business strategies.
The current study explores HR measurement and reporting practices of firms belonging to the manufacturing and service sectors in Sri Lanka. The current study is different from previous studies in several respects. First, the majority of past studies on the measurement and reporting of HR were conducted on the voluntary disclosure of information in annual reports, with firms being selected on the basis of their market capitalization, and data was analysed using content analysis ([1] Abeysekera, 2008; [2] Abeysekera and Guthrie, 2004; [13] Guthrie and Petty, 2000; [15] Kamath, 2008; [20] Nurunnabi et al. , 2011; [23] Olsson, 2001). Yet, literature suggests two main issues in connection to content analysis, i.e. the content analysis of disclosed annual report information is mainly based on a non-random sample of firms ([5] Ax and Marton, 2008) and many firms do not disclose all the available information ([5] Ax and Marton, 2008; [16] Khan and Ali, 2010; [17] Khan and Khan, 2010).
Second, the literature suggests the importance of human resource management (HRM) practices of acquisition, development, allocation, replacement or retention of employees and reporting of HR information ([11] Flamholtz, 1972). In this regard, [3] Abhayawansa and Abeysekera (2008) highlighted the importance of investigating HRM practices and organizational systems that are in place to leverage the value of HR. Some past studies suggests that firms may be motivated to voluntarily disclose information under certain conditions (such as a need to portray a positive image). For instance, the UK Government's initiative in...