Valuing Illiquid Common Stock

Posted: 24 Sep 2008

See all articles by Edward Alexander Dyl

Edward Alexander Dyl

University of Arizona

George J. Jiang

Washington State University

Date Written: September, 23 2008


Illiquid common stock is worth less than stock that can be readily sold because the investor incurs an opportunity cost by being locked into the investment. Quantifying the amount of this illiquidity discount is an important issue in valuing certain common stock, especially for estate valuations. We examine whether a previously developed analytical model for valuing the lost "option to sell" when a stock is illiquid is a useful, practical tool for valuing illiquid common stock.

Keywords: Equity Investments, Fundamental Analysis and Valuation Models, Alternative Investments, Other

Suggested Citation

Dyl, Edward A. and Jiang, George, Valuing Illiquid Common Stock (September, 23 2008). Financial Analysts Journal, Vol. 64, No. 4, 2008, Available at SSRN:

Edward A. Dyl (Contact Author)

University of Arizona ( email )

Department of Finance
Tucson, AZ 85721
United States
520-621-9534 (Phone)
520-621-1261 (Fax)

George Jiang

Washington State University ( email )

Department of Finance and Management Science
Carson College of Business
Pullman, WA 99-4746164
United States
509-3354474 (Phone)


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