If a firm has less than 50% control of an entity in which it has a beneficial interest, it applies the equity method rather than consolidation if it has more than 20% voting interest in the entity. That reports the share of profits or losses in the income statement but not the detail on revenues, profit margins, and taxes that the investor requires to understand the value drivers. In the balance sheet, there is no detail of the net assets that generate the value, nor of the leverage in the subsidiary. The investor is left short on information. At one time, The Coca-Cola Company adopted “the 49 percent solution”: Hold only 49 % of the outstanding shares in subsidiaries and thus use the equity method. As this included their bottlers and distribution companies, it left investors in the lurch.
A solution is proportional consolidation: Consolidate the subsidiary into the parent company’s accounts as with the accounting when the interest is over 50%. Then you get the information. That, of course, can only be done if there are published financial statements for the subsidiary. That is the case in the EU and UK where private company accounts are available. But in the U.S. accounts are available only for public companies whose shares are listed for public trading, though also for companies where their stock is not listed but their debt is.