The Case Of Shearsons Unbundled Stock Units: Why Did They Fail And Can Value Be Created?

Abstract

This paper uses rudimentary financial models to examine the valuation consequences of Shearsons now defunct financial innovation, unbundling. Though in its present form, this attempted financial innovation did not survive, a discussion of the potential value that may have been created is not without merit. First such a discussion may provide insights useful for future innovations. But perhaps more importantly, we suggest that under certain circumstances, for specific firms, unbundling does have the potential to create value.