International Accounting

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

Vol. 20, Iss. 24, DECEMBER 2017

Received: 11 October 2017

Received in revised form: 23 October 2017

Accepted: 3 November 2017

Available online: 22 December 2017


JEL Classification: M40, M41

Pages: 1414–1426

Plotnikov V.S. Plekhanov Russian University of Economics, Sevastopol Branch, Sevastopol, Russian Federation

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

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


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Vol. 20, Iss. 24
December 2017