The purpose of this study is to investigate the effects of human resources current expenses, as a large and persistent component of earning, on the prediction of firm future performance. So, based on existing literature, the employee model and earning model have introduced and two dependent variables, earning predictability and value relevance, have entered into these models. In this study, 125 listed companies on TSE over a period of 7 years, between 2006 and 2013 selected as sample. Firstly, in this research by using mean comparison test (t-test), the two models have been compared and the results show that employee model, due the consideration of employee expenses (in addition to the earnings), has a better explanation of company’s future performance. Then by using multiple regression and ordinary least squares method, three properties of human resource current expenses; named average salary per employee, employee expenses intensity, employee expenses persistence; and the difference in earning predictability and value relevance of two models have been investigated. This study is the first to investigate the effects of human Resource’s current expenses on earnings predictability and value relevance of Iranian firms. Also, the provided empirical evidence in this paper further enhances the role of an employee by developing employee model. Results show that there is a significant relationship between the persistence of human resource current expenses and earning predictability and value relevance. The two other properties have a significant relationship with earning predictability but do not have a significant relationship with value relevance.
