Application of Fundamental Valuation to Russian Non-Traded Companies: Towards Private Equity Market Formation

Abstract

The goal of the paper is to develop an approach to assessing the fundamental (intrinsic) value of Russian traded and non-traded companies and in doing so to contribute to the private equity market formation. To obtain a measure for fundamental value a modified Ohlson model is proposed and then tested using regression analysis on a sample of Russian traded companies for the period 2002-2013. The results of our study enable to derive a formula for a particular accounting year that can be used in order to assess the value of companies of different industries.