An analysis of human capital investments, profitability ratios and company features in the EUures in EU

  • Snježana Pivac University of Split, Faculty of Economics Split
  • Željana Aljinović Barać University of Split, Faculty of Economics Split
  • Ivana Tadić University of Split, Faculty of Economics Split

Abstract

The aim of this paper is to explore the dynamics between human capital investments and company profitability measured by return on equity and profit margin ratios using panel data analysis over a five-year period. The research hypothesis assumes that more profitable companies have higher employee costs (human capital investment) and the opposite is also true. This specially refers to companies in human-capital-intensive industries, such as the information technology industry, where a company’s most valuable asset is employee knowledge. Thus, the assumption is that such entities will have a greater part of intellectual capital capitalized through trademarks. Furthermore, this paper analyses whether the level of human capital investments significantly differ with regard to company size and listing status. Verification of empirical evidence is provided using a sample of approx. 5,000 companies in the European Union from the information technology industry for the period 2011-2015, i.e. approx. 25,000 company-year observations using an adequate panel data analysis technique.

Author Biographies

Snježana Pivac, University of Split, Faculty of Economics Split
Department of Quantitative Methods, Professor, PhD
Željana Aljinović Barać, University of Split, Faculty of Economics Split
Department of Accounting, Associate Professor,PhD
Ivana Tadić, University of Split, Faculty of Economics Split
Department of Management, Assistant Professor, PhD
Published
2017-03-31
Section
CRORR Journal Regular Issue