This law school text explores the Enron debacle from a variety of different aspects. Essays analyze the business-government interactions and decisions that laid the foundations for Enron's growth and subsequent demise. Other essays describe and detail the complex web of partnerships and accounting tricks used by Enron to hide bad news and project good news. Additional essays focus on the ethical and legal dimensions of the Enron crisis, and the subsequent lessons for business and law students, as well as for society.
A definitive new reference on the major failures of American corporate governance at the start of the 21st century. Tracing the market boom and bust that preceded Enron's collapse, as well as the aftermath of that failure, the book chronicles the meltdown in the telecom sector that gave rise to accounting scandals globally. Featuring expert analysis of the Sarbanes-Oxley legislation that was adopted in response to these scandals, the author also investigates the remarkable market recovery that followed the scandals. An exhaustive guide to the collapse of the Enron Corporation and other financial scandals that erupted in the wake of the market downturn of 2000, this book is an essential resource for students, teachers and professionals in corporate governance, finance, and law.
This law school text explores the Enron debacle from a variety of different aspects. Essays analyze the business-government interactions and decisions that laid the foundations for Enron's growth and subsequent demise. Other essays describe and detail the complex web of partnerships and accounting tricks used by Enron to hide bad news and project good news. While other essays focus on the ethical and legal dimensions of the Enron crisis, and their lessons for business and law students, as well as for society.
After Enron addresses the major lessons about accounting, auditing, taxation, and corporate governance that are illustrated by the collapse of Enron and other recent major corporate scandals. The book then develops a set of proposals for changes in public policy that would lead accountants, bankers, board members, lawyers, and corporate managers to better serve the interests of the general public.
A Brookings Institution Press and American Enterprise Institute publication A few years ago, Americans held out their systems of corporate governance and financial disclosure as models to be emulated by the rest of the world. But in late 2001 U.S. policymakers and corporate leaders found themselves facing the largest corporate accounting scandals in American history. The spectacular collapses of Enron and Worldcom—as well as the discovery of accounting irregularities at other large U.S. companies—seemed to call into question the efficacy of the entire system of corporate governance in the United States. In response, Congress quickly enacted a comprehensive package of reform measures in what has come to be known as the Sarbanes-Oxley Act. The New York Stock Exchange and the NASDAQ followed by making fundamental changes to their listing requirements. The private sector acted as well. Accounting firms—watching in horror as one of their largest, Arthur Andersen, collapsed after a criminal conviction for document shredding—tightened their auditing procedures. Stock analysts and ratings agencies, hit hard by a series of disclosures about their failings, changed their practices as well. Will these reforms be enough? Are some counterproductive? Are other shortcomings in the disclosure system still in need of correction? These are among the questions that George Benston, Michael Bromwich, Robert E. Litan, and Alfred Wagenhofer address in Following the Money. While the authors agree that the U.S. system of corporate disclosure and governance is in need of change, they are concerned that policymakers may be overreacting in some areas and taking actions in others that may prove to be ineffective or even counterproductive. Using the Enron case as a point of departure, the authors argue that the major problem lies not in the accounting and auditing standards themselves, but in the system of enforcing those standards.
The questions investors need to ask . . . The answers corporate America must give about the true facts of corporate performance and value. During the 2001 baseball season, when games were played at Enron Field in Houston, a typical reaction was: “What the hell is Enron and what do they do?” Now we know more about the executives and inner workings of today’s best-known rogue company than we ever imagined. But it turns out that Enron is just the most egregious case of a disturbing trend and the seemingly unstoppable tendency of some capitalists to destroy capitalism. Something like 50 percent of American households directly support the markets by investing in stocks and mutual funds. But some of the people entrusted with the responsibility for maintaining and managing the corporation—senior executives, boards of directors, auditing firms—have become engaged in what can only be called economic terrorism. Enron, Sunbeam, Global Crossing, and Waste Management are but the tip of the iceberg. Luckily, there are ways for investors to spot corporate smoke and mirrors and challenge the players. Larry Elliott and Richard Schroth show investors the questions that need to be asked to get a handle on the performance reality of companies. The corporate world, in turn, needs a return to reality and authenticity in business operations, finance, accounting, and deal making. This need for performance reality is not an issue confined to a few companies who engage in unethical and illegal behavior. The technological pace of change, along with increasingly complicated business transactions, makes global markets more and more complex. The assumption, however, has always been that we have the management competence and rigor to ensure shareholder value. Enron is definitive proof that the way companies are run—the gap between what they say is reality and what is really the case—is frightening. And this gap has severe implications for millions of people who are employees of and investors in these companies. Using Enron as the touchstone, Larry Elliott and Richard Schroth show investors how to think about and measure the candor of corporations, the Wall Street players, and their supporters.
This paper presents a brief historical overview of Enron's rise and fall and summarizes what the authors currently know about (1) the evolution of Enron's business model, (2) those organizational processes relied upon by senior Enron officials to drive and monitor the business, (3) emergent behavior related to the structuring, management, and valuation of major partnerships, and (4)oversight provided by Enron's management and board of directors. It concludes by posing the question of how Enron's story as anew, post-deregulation corporate model could have escaped critical analysis by the financial community, the business press, and other observers for so long. As such, this paper is an exercise in description, not interpretation. Since many of the facts about Enron's rise and fall have yet to be determined and agreed upon, this description must be considered tentative and incomplete. Nevertheless, the broad contours of the Enron story presented in this paper provide a sufficient basis for developing initial hypotheses about what might have caused such a swift and ignominious fall and what business and public policies might best protect employees, shareholders, and other relevant parties in the future from the kind of injuries experienced in Enron's swift decline into bankruptcy.
The first comprehensive financial history of the United States in more than thirty years. Accessible to undergraduate level readers, it focuses on the growth and expansion of banking, securities, and insurance from the colonial period right up to the incredible growth of the stock market during the 1990s and the attack on the World Trade Center in 2001. The author traces the origins of American finance to the older societies of Europe and Northern Africa, and shows how English merchants transferred their financial systems to America. He explains how financial matters dominated the founding and development of the colonies, and how financial concerns incited the Revolution. And he shows how the Civil War began the transformation of America from a small economy largely dependent on foreign capital into a complex capitalist society. From the Civil War, the nation's financial history breaks down into periods of frenzied speculation, quiet growth, periodic panics, and furious periods of expansion, right up through the incredible growth of the stock market during the 1990s.
ESPIONAGE. FRAUD. POLITICS. "This book is one of the most chilling and compelling business stories I've ever read. Lynn Brewer lived the Enron story, and in a deeply personal, yet highly professional way, lets us peek into what can go horribly wrong in a publicly-traded business. There are some great lessons for leadership in this tale." Oren Harari, Author, The Leadership Secrets of Colin Powell "In this incredibly lucid and juicy account of Enron's shenanigans, Lynn Brewer courageously reveals what went on behind the scenes. What she reports will shock the financial press who voted Enron "the most innovative and admired" five years in a row. It will shame research analysts and investors who drove Enron's stock up into the stratosphere - while never being able to explain how Enron made money. Brewer hasn't forgotten the teachers, the small business owners and retirees who lost a bundle when the house of cards came crashing down. She urges us to see Enron not simply as the failure of a few people and institutions. No, it is symptomatic of our win-at-any-cost culture. To prevent future Enrons, we all must look to see how our choices perpetuate this culture, which ultimately, like Enron, is unsustainable." L. J. Rittenhouse, Author, Do Business With People You Tru$t: Balancing Profits and Principles "Lynn Brewer unabashedly exposes the unchecked greed and chicanery operating in the leadership of Enron. Her story clearly reveals how the unethical leadership at Enron led to an unbearable culture of emotional turbulence and fear, drawing everyone into a web of deceit. Readers will get the inside view of one of the country's biggest corporate scandals." Danna Beal, M.Ed., Author, Tragedy in the Workplace: The Longest Running Show in the Country LIES. DECEPTIONS. SCANDAL. ENRON. Confessions of an Enron Executive: A Whistlebower's Story, is Lynn Brewer's gripping account of nearly three years spent with the company that has come to symbolize the worst in corporate greed. Lynn's riveting tale takes you deep into the heart of Enron for a shocking look at both the notorious illicit deals and the unscrupulous people who made them. Having spent time with Enron's water company, trading division, power trading desk, and the broadband unit, coupled with Lynn's background in accounting and law, a scandalous portrait emerges of a company run amok in the name of naked avarice. Fascinating, revelatory, and often times hilarious, Confessions of an Enron Executive: A Whistleblower's Story details the riveting account of her career at Enron, and her decision to blow the whistle to lawyers and the United States Government, long before the world had ever heard of Sherron Watkins. Cover Designed By: Paguirigan Branding & Design
This brief extends studies on how corporations respond to scandals by examining the evolution of the accounts that corporate agents develop after a scandal becomes public. Guided by the theory of accounts and a recently developed perspective on crisis management, its examines how the accounts developed by thirteen corporations caught up in highly publicized scandals changed from the time of initial exposure to the issuance of an investigative report. This brief continues the discussion of the broader managerial and social implications of the analysis of accounts, and analyses their effect on our understanding of the ability of corporations to weather serious scandals. It includes four case studies; from Switzerland, Moldova, Denmark, and Norway respectively.
