Journal of Management Research

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

The Enron Implosion and Its Lessons


Affiliations
1 C. Rollin Niswonger Professor of Accountancy Richard T. Farmer School of Business Administration Miami University, Oxford, Ohio 45056
     

   Subscribe/Renew Journal


Enron's implosion in 2001 took the world capital markets by surprise and shook the investor confidence in accounting and financial reporting. It even caused the collapse of the prestigious international accounting firm of Arthur Andersen. From the most innovative corporation, Enron suddenly became the poster for executive greed and flaws in corporate governance. An event of the magnitude of Enron's collapse has serious consequences for the efficient functioning of capital markets worldwide. The purpose of this paper is to review Enron's growth, roles of its key executives, specialpurpose entities and the auditors, and the prevailing corporate culture. The paper ends with the suggestions to improve corporate governance for preventing such future corporate failures.

Keywords

Enron, Enron’s Implosion, Arthur Andersen, Special-purpose Entities, Corporate Governance
User
Notifications

  • Blasi, Joseph, Douglas Kruse, and Aaron Bernstein (2003), In The Company of Owners: The Truth About Stock Options, Basic Books,

  • New York.

  • "Bracing For A Backlash,"Special Report: The Enron Scandal (2002), Business Week (BW), February 4, pp. 34-44.

  • Brown, Ken and Jonathan Weil (2002), How Andersen's Embrace of Consulting Changed the Culture of the Company, The Wall Street Journal (WSJ), March 12, p. C1.

  • Bryce, Robert (2002), Pipe Dreams: Greed, Ego, and the Death of Enron, Public Affairs, New York.

  • Dugan, Lanthe J. and Devon Spurgeon (2002), For Many at Andersen, Enron Wasn't a Client, But Now It's a Problem, The Wall Street Journal, March 21, p. A1.

  • Emshwiller, John R. and Rebecca Smith (2002), Murky Waters: A Primer on Enron Partnerships, The Wall Street Journal, January 21, pp. C1, C14.

  • Enron Corporation (2000), Annual Reports, 10-K and other filings with the SEC for 1998, 1999, and 2000, http://www.enron.com.

  • Financial Accounting Standards Board (1993), Statement of Financial Accounting Standards No. 115, Accounting for Investments in Certain Debt and Equity Securities, FASB, Norwalk, CT.

  • Fusaro, Peter C. and Ross M. Miller (2002), What Went Wrong At Enron, John Wiley, New York.

  • Lee, Susan (2001), The Dismal Science: Enron's Success Story, The Wall Street Journal, December 26, p. A11.

  • Levitt, Arthur (2002), Take on the Street, Pantheon Books, New York.

  • McLean, Bethany (2001), Why Enron Went Bust, Fortune, December 24, pp. 59-68.

  • Powers, William, Jr. (2002), Report of the Special Investigation Committee [of Enron], Enron Corporation, February 1.

  • Sellner, Wendy, Christopher Palmeri, Mike France, Joseph Weber and Dan Carney (2002), Jeff Skilling: Enron's Missing Man, Business Week, February 11, pp. 38-44.

  • Smith, Rebecca and John R. Emshwiller (2001), Fancy Finances Were Key to Enron's Success, and Now to Its Distress, The Wall Street Journal, November 2, p. A1.

  • The Wall Street Journal (2002), A Chronology of Enron's Recent Woes, http://www.WSJ.com, November 15.

  • Thomas, C. William (2002), The Rise and Fall of Enron, Journal of Accountancy, April: 41-48.

  • Weil, Jonathan (2001), What Enron's Financial Reports Did—and Didn't—Reveal, The Wall Street Journal, November 5, p. C1.


Abstract Views: 786

PDF Views: 1




  • The Enron Implosion and Its Lessons

Abstract Views: 786  |  PDF Views: 1

Authors

Gyan Chandra
C. Rollin Niswonger Professor of Accountancy Richard T. Farmer School of Business Administration Miami University, Oxford, Ohio 45056

Abstract


Enron's implosion in 2001 took the world capital markets by surprise and shook the investor confidence in accounting and financial reporting. It even caused the collapse of the prestigious international accounting firm of Arthur Andersen. From the most innovative corporation, Enron suddenly became the poster for executive greed and flaws in corporate governance. An event of the magnitude of Enron's collapse has serious consequences for the efficient functioning of capital markets worldwide. The purpose of this paper is to review Enron's growth, roles of its key executives, specialpurpose entities and the auditors, and the prevailing corporate culture. The paper ends with the suggestions to improve corporate governance for preventing such future corporate failures.

Keywords


Enron, Enron’s Implosion, Arthur Andersen, Special-purpose Entities, Corporate Governance

References