Valuing human and social capital
Seminar paper from the year 2004 in the subject Business economics - Investment and Finance, grade: 2,3, European Business School - International University Schloß Reichartshausen Oestrich-Winkel, course: Seminar Finance & Banking, 42 entries in the bibliography, language: English, abstract: Industries and countries experience a shift from manufacturing to service and techno logy based systems. Intangible assets like human and social capital become relatively important drivers of value. Furthermore, new accounting standards create a need for a standardized valuation of intangibles. The raise of hidden values develops into an important issue especially in business combinations. Financial statements provide very few information about human or social capital, but shareholders and stakeholders become more interested in these information. When a company acquires another, a single price is paid for a bundle of assets. The price reflects the firm value as a whole at a specific date, but the particular values of the individual assets are seldom transparent. Furthermore, intangibles receive 50% to 70% of an average firm’s annual investments, but the possible achievements are not shown in the balance sheet. Thought, it is crucial to company success. This paper will analyze different methods for valuing human and social capital. Different approaches will be described and the suitability for valuation will be evaluated. The focus will be on a company’s human and social capital, because the value of personnel human and social will not contribute to the problem solving.
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2.2 Definition Ability to create appraised period Appraising Human Capital Aschoff Aspects and components Assets and Human BARUCH calculated capital and value capital is relatively capital of employee capital value create other capital dimension efficiency rate Expected value firm’s human capital Flamholtz 1974 forecast formula looks Furthermore future earnings future salaries Ghoshal Harvard Business Review Hermanson 1964 human and social human capital valuation Human Resource Accounting Industry average return Intangible Assets Intellectual Capital interaction MELANDER method of valuing MORSE Nahapiet net output operational assets Persch Position of human present value relations relationship return in period risk free rate Robison Role of Intrafirm salaries in period scenario following period Schmid Siles 2002 Schwartz static human capital ternational Tsai Uzzi Valuation Methods value creation value of future value of human value of services valuing a firm’s valuing human capital valuing social capital weighted average cost