Decision-Making Based on Human Resource Accounting Information and Its Evaluation Method

Abstract

Skillful and specialized human resources are of vital importance for an organization just like its physical properties and investments. Managers of the organizations spend a lot of money for training and educating their workers and employees in order to increase the efficiency of the organization under their control, but human resources accounting system which should be used for human resources information processing have not been used practically by any organization in Iran. This paper explores firstly, whether investment decisions are affected by human resource accounting information disclosed in the financial statements or not? Secondly it explores as to what factors can interfere in this effect? Thirdly it examines which evaluation method of human resource is the most appropriate method consistent with Iranian companies in terms of qualitative characteristics of accounting information? The results indicate that human resource accounting (HRA) information disclosure in financial statements is relevant and affect on the optimal investment decisions. Furthermore, other results state that the most effective and appropriate evaluating method of human resource consistent with current status of Iranian companies and institutions is the original cost method (Historical cost).