Relationship Between Human Capital Investments and Firm’s Net Profit

Sa？etak This paper examined whether human capital investment (HCI) does contribute to the profit performance of selected companies in the FTSE/JSE Responsible Investment Index Series. Secondary data on companies’ profit, human capital investment (HCI) (main independent variable) and sales turnover (STO) (control variable), were collec-ted from the integrated reports of 28 companies for six years 2010 – 2015. Using a pa-nel data approach and the regression statistics, findings from the analysis present two important findings. Firstly, the P value on the influence of two independent variables (HCI and STO) indicate a significant relationship at P = 0.0001. Secondly, the HCI, ac-ting alone, shows a negative but not significant relationship with net profit. However, this relationship is temporary; at long run, HCI has the propensity to positively impact better performance of net profit, hence companies should not evaluate the HCI profit performance based purely on a short term. The benefit would take a little while to mature. The paper recommends further research to cover wider pool of companies at longer term