From People Costs to Investor Value: A Structured Survey of Literature on Human Resource Spending and Firm Valuation

Rajib Bhattacharya; Smita Chakraborty; Lopamudra Roy; Pramit SenGupta

From People Costs to Investor Value: A Structured Survey of Literature on Human Resource Spending and Firm Valuation

Author(s)	Rajib Bhattacharya, Smita Chakraborty, Lopamudra Roy, Pramit SenGupta
Country	India
Abstract	Human resources have traditionally been treated as operating costs rather than strategic investments, largely because their value is difficult to measure and report within conventional accounting frameworks. However, growing evidence from human capital economics, strategic human resource management, and finance suggests that investments in people—such as training, talent acquisition, compensation design, and HR systems, may influence firm performance and, ultimately, investor wealth. Against this backdrop, the present study undertakes a structured review of the literature to examine how, when, and under what conditions human resource (HR) spending contributes to shareholder value. Drawing on established review protocols, the study systematically synthesises theoretical, empirical, and methodological contributions from prior research spanning human capital theory, the resource-based view, agency theory, signalling theory, and stakeholder perspectives. The review highlights that HR spending affects investor wealth primarily through indirect mechanisms, including productivity enhancement, innovation capacity, risk reduction, and market signalling. Empirical evidence suggests that while HR investments consistently improve intermediate organisational outcomes such as productivity and retention, their translation into accounting performance and market valuation is heterogeneous and dependent on context. The findings further reveal that industry characteristics, firm life cycle, complementary investments, labour market conditions, and disclosure quality act as critical moderators shaping investor responses to HR spending. Persistent challenges related to measurement, disclosure, and endogeneity continue to limit the visibility of human capital value in capital markets. By integrating insights across disciplines, this review clarifies why investor reactions to HR spending are often uneven and delayed. The study contributes to the literature by offering an integrated framework that links HR spending to investor wealth through multiple channels and boundary conditions. It also identifies promising directions for future research, particularly in the areas of human capital disclosure, longitudinal analysis, and causal identification.
Keywords	Human resource spending; Human capital; Investor wealth; Firm valuation; Strategic HRM
Field	Business Administration
Published In	Volume 7, Issue 2, February 2026
Published On	2026-02-11

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From People Costs to Investor Value: A Structured Survey of Literature on Human Resource Spending and Firm Valuation

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