Valuing Minority Interests

51 Pages Posted: 29 Oct 2019 Last revised: 31 Aug 2021

See all articles by Doron Nissim

Doron Nissim

Columbia University - Columbia Business School

Date Written: August 1, 2021


For many firms, the value of common equity is affected by the value of two types of minority interests: equity method investments (the company’s significant minority stakes in affiliated entities), and non-controlling interests (outside minority interests in the company’s partially-owned subsidiaries). In most cases little information is provided on these claims, and their value is accordingly estimated using book value. This study develops an algorithm to estimate the value of minority interests using book value, earnings, and the average pricing of these fundamentals in the firm’s industry. Valuing minority interests using the algorithm instead of book value results in statistically and economically significant improvement in the accuracy of the estimated value of common equity.

Keywords: equity method investments, non-controlling interests, minority interests, investments in associates, valuation, industry multiples

JEL Classification: G12, G14, G30, M41

Suggested Citation

Nissim, Doron, Valuing Minority Interests (August 1, 2021). Columbia Business School Research Paper Forthcoming, Available at SSRN: or

Doron Nissim (Contact Author)

Columbia University - Columbia Business School ( email )

United States
212-854-4249 (Phone)

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