Economic Analysis: Theory and Practice
 

The customer equity concept in integrated reporting: An analysis of theoretical background

Vol. 16, Iss. 11, NOVEMBER 2017

Received: 11 October 2017

Received in revised form: 23 October 2017

Accepted: 3 November 2017

Available online: 29 November 2017

Subject Heading: ANALYSIS OF SOCIAL AND REPUTATIONAL CAPITAL

JEL Classification: M40, M41

Pages: 2098–2110

https://doi.org/10.24891/ea.16.11.2098

Plotnikov V.S. Plekhanov Russian University of Economics, Sevastopol Branch, Sevastopol, Russian Federation vcplotnikov@yandex.ru

Azrakuliev Z.M. Dagestan State Agrarian University named after M.M. Djambulatov, Makhachkala, Republic of Dagestan, Russian Federation azrakulievzamir@mail.ru

Importance The concept of integrated reporting provides for the recognition of customer equity as an asset and determines a set of customers and market segments where a company intends to carry out its client-oriented activities. Customer equity is included in business valuation when investors make decisions about attractiveness of investment in the company.
Objectives The study aims to investigate accounting treatment and assessment of client-oriented activities that create the value of customer equity. This increases the role of business analysis and business accounting in the information support of various stakeholder groups.
Methods The methodology rests on the theory of supply and demand, the theory of transaction costs, the positive economics theory, the International Integrated Reporting Framework that helped substantiate our hypotheses about customer equity business accounting.
Results To underpin the methodology of customer equity business accounting, we suggest a number of hypothesis, namely, the customer equity is a non-identifiable asset and should be recognized as a separate element of the value of company's capital reserves; transaction costs of client-oriented activities should be capitalized and make a basis for customer equity valuation, and some others.
Conclusions The initial book value of customer equity is capitalized transaction costs of client-oriented activities, its residual value reflects a change in its stock value, its growth, or impairment. The latter is compensated by financial investments in client-oriented activities.

Keywords: business accounting, integrated reporting, customer equity, customer-oriented activities, customer satisfaction

References:

  1. Furubotn E., Richter R. Instituty i ekonomicheskaya teoriya: dostizheniya novoi institutsional'noi ekonomicheskoi teorii [Institutions and Economic Theory: The Contribution of the New Institutional Economics]. St. Petersburg, SPbSU Publ., 2005, 701 p.
  2. Keynes J.N. Predmet i metod politicheskoi ekonomii [The Scope and Method of Political Economy]. Moscow, Direktmedia Pablishing Publ., 2008, 278 p.
  3. Samuelson P.E., Nordhaus W.D. Ekonomika [Economics]. Moscow, Vil'yams Publ., 2008, 1360 p.
  4. Winch P. The Idea of a Social Science and its Relation to Philosophy. London, Routledge, 1958.
  5. Filosofiya ekonomiki. Antologiya [The philosophy of economics. Anthology]. Moscow, Gaidar Institute Publ., 2012, 520 p.
  6. Friedman M., Savage L.J. Analiz poleznosti pri vybore sredi al'ternativ, predpolagayushchikh risk. V kn.: Teoriya potrebitel'skogo povedeniya i sprosa [The Utility Analysis of Choices Involving Risk. In: Theory of Consumer Behavior and Demand]. St. Petersburg, Ekonomicheskaya shkola Publ., 1993, pp. 209–230.
  7. Polyak B.T., Gryazina E.N., Tremba A.A. [The current state of the D-decomposition method]. Avtomatika i telemekhanika = Automation and Remote Control, 2008, no. 11, pp. 3–40. (In Russ.)
  8. Coase R.H. The Nature of the Firm. Economica, New Series, 1937, vol. 4, no. 16, pp. 386–405.
  9. Williamson O.E. Ekonomicheskie instituty kapitalizma: Firmy, rynki, otnoshencheskaya kontraktatsiya [The Economic Institutions of Capitalism]. St. Petersburg, Lenizdat, CEV Press Publ., 1996, 702 p.
  10. Palii V.F. [Defining the subject of accounting]. Bukhgalterskii uchet = Accounting, 2012, no. 5, pp. 95–98. (In Russ.)
  11. Simon H., Archibald G.C. Discussion. The American Economic Review, 1963, vol. 53, no. 2, pp. 227–236.
  12. Kaplan R.S., Norton D.P. Sbalansirovannaya sistema pokazatelei. Ot strategii k deistviyu [The Balanced Scorecard: Translating Strategy Into Action]. Moscow, Olimp-biznes Publ., 2014, 320 p.
  13. Plotnikov V.S., Plotnikova O.V. [Business accounting and integrated reporting]. Mezhdunarodnyi bukhgalterskii uchet = International Accounting, 2014, no. 13, pp. 25–34. (In Russ.)
  14. Plotnikov V.S., Plotnikova O.V. [Concept of preparation financial statements: concept consolidated financial statements and international concept of integrated reporting]. Auditor, 2014, no. 10, pp. 42–50. (In Russ.)

View all articles of issue

 

ISSN 2311-8725 (Online)
ISSN 2073-039X (Print)

Journal current issue

Vol. 16, Iss. 11
November 2017

Archive