The Role of Human Talent Capital in Shaping Firm Value: Evidence from Non-Financial Sector of Pakistan Stock Exchange (PSX).

Abstract

Purpose- This study examines the relationship between human talent capital and firm performance, focusing on firm value, growth opportunities, and volatility. The interaction effect of firm size on this association is also explored.

Study Design/methodology/approach – This quantitative study uses a fixed effects model; the study analyzes data from 290 firms over 11 years (2013-2023). Diagnostic tests are employed to ensure the robustness of the results.

Findings- The findings of the study reveal a significant positive impact of human talent capital on firm value and growth opportunities. Supported by quantitative measures, larger firms show greater utilization of human talent capital. Moreover, human talent capital mitigates cash flow volatility, highlighting its role in firm risk management. Profitability, liquidity, and innovation also significantly affect firm value and growth.

Research limitations/implications – The study has several limitations. Firstly, the generalizability of the findings may be constrained by the focus on a specific industry and geographic region. Secondly, the reliance on quantitative data and fixed effects model might overlook qualitative factors influencing the human talent capital phenomenon. Thirdly, external factors such as macroeconomic conditions and regulatory changes could impact the study's findings, deserving further exploration.

Research Practical Implications- The study advocates for corporate governance reforms and policy interventions to prioritize human talent capital investments. Financial strategies such as maintaining liquidity and managing leverage are recommended to stabilize firm volatility.

Originality/value- This research highlights human talent capital as a key determinant of firm performance, encouraging strategic investments in human talent capital and financial management practices to enhance organizational success.