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Human Capital as a Financial Asset: A Systematic Survey of Literature

Author(s) Rajib Bhattacharya, Smita Chakraborty, Lopamudra Roy, Pramit SenGupta
Country India
Abstract This study provides a systematic literature review of recent research examining the relationship between human capital management (HCM) practices and corporate financial performance. As firms increasingly operate in knowledge-driven and intangible-intensive environments, traditional finance models centred on physical assets and financial capital have proven insufficient to explain variations in firm profitability, value, and risk. Against this backdrop, the present review synthesises contemporary evidence on how employee-related practices function as economically meaningful drivers of firm-level financial outcomes. Following the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines, the study reviews peer-reviewed, Scopus-indexed journal articles published between 2020 and 2025. The review draws on leading databases including Scopus, Web of Science, ScienceDirect, SpringerLink, Wiley, and Emerald, ensuring comprehensive coverage of finance, accounting, management, and sustainability research. Only studies empirically linking HCM constructs i.e. training and development, employee retention, leadership development, diversity and inclusion, and employee treatment, to accounting-based, market-based, or risk-related financial outcomes are included. The findings are organised into five thematic areas. First, training and skill development are consistently associated with higher productivity, innovation capacity, and long-term profitability. Second, employee retention emerges as a critical determinant of cost efficiency, earnings stability, and operational continuity. Third, leadership development and governance quality influence financial outcomes by shaping decision quality, risk management, and strategic alignment. Fourth, diversity and inclusion, particularly at leadership and board levels, are positively linked to firm valuation through improved governance, stakeholder trust, and reduced risk. Finally, strong HCM practices are shown to reduce firm risk, including earnings volatility, stock price crash risk, and financial distress probability. Beyond synthesising empirical evidence, the review identifies persistent methodological and conceptual gaps in the literature, including limited causal inference, heavy reliance on proxy measures, geographic concentration in developed economies, and insufficient integration of human capital variables into risk-focused finance models. By consolidating fragmented findings and clarifying underlying mechanisms, the study contributes to the growing recognition of human capital as a financially material asset. This review advances corporate finance scholarship by positioning human capital management as a central determinant of firm profitability, value, and resilience. It offers actionable insights for managers, investors, and policymakers and provides a structured agenda for future research aimed at integrating human capital more fully into financial theory and practice
Keywords Human Capital Management, Corporate Financial Performance, Firm Risk, ESG and Human Capital, Systematic Literature Review.
Field Business Administration
Published In Volume 17, Issue 2, Array 2026
Published On 2026-02-11
Cite This Human Capital as a Financial Asset: A Systematic Survey of Literature - Rajib Bhattacharya, Smita Chakraborty, Lopamudra Roy, Pramit SenGupta - IJTAS Volume 17, Issue 2, Array 2026.
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