Enron and World Finance

A Case Study in Ethics

P. Dembinski, C. Lager, A. Cornford, J. Bonvin, P. Dembinski, C. Lager, A. Cornford, J. Bonvin

• Publisher: Palgrave Macmillan
• Year: 2005
• Print ISBN: 9781403947635
• eBook ISBN: 9780230518865
• Topic: Business
• Subtopic: Accounting
• Index: Business

Four years after the debacle, the term 'Enron' has earned its place in the everyday vocabulary of business ethics. Hardly anyone understands the business intricacies of what really happened with the sophisticated energy conglomerate. Even fewer are those able to envision, beyond the business case, the ethical questions and dilemmas facing actors at any one stage of the drama. Using the collapse of Enron as a case study, this book not only shows how and where ethics came into play, but also draws lessons and discusses possible remedies that may prevent the whole financial system from falling apart as a result of either excessive greed or over-regulation.

Table of contents

• Cover
• Contents
• List of Tables and Boxes
• Acknowledgements
• Notes on the Contributors
• List of Abbreviations
• 1 Overview of the Book
• Enron: origins, character and failure
• Transactions and institutional structure
• Accounting and auditing
• Strengthening corporate governance
• Corporate culture and incentive systems
• Ethical foundations
• Part 1 Enron: Origins, Character and Failure
• 2 Enron and Internationally Agreed Principles for Corporate Governance and the Financial Sector
• Introduction
• A sketch of Enron
• Accounting and transactional techniques used by Enron
• Enron’s financial reports
• Some other examples of Enron’s activities
• Different parties and non-observance of good corporate governance
• Corporate governance and the OECD Principles
• The policy response to recent corporate scandals
• Corporate governance and key financial standards
• Annex 1 Illustrations of Enron’s accounting and transactional techniques
• Annex 2 A look at some of Enron’s financial reports
• 3 A Revisionist View of Enron and the Sudden Death of ‘May’
• Introduction
• A revisionist view of Enron
• The regulatory response to Enron’s use of derivatives
• Conclusion
• 4 Who Is Who in the World of Financial ‘Swaps’ and Special Purpose Entities
• Part 2 Ethics in Thought and Action
• 5 An Ethical Diagnosis of the Enron Affair
• Principles of action and the foundation of ethics: some diagnostic tools
• The ethical basis for an analysis of the Enron affair
• Conclusion
• 6 Anonymity: Is a Norm as Good as a Name?
• A society of the anonymous
• What does anonymity convey?
• Anonymity and compartmentalisation
• Norms and names
• Is communitarianism the answer to anonymity?
• Decent dress: how much to reveal?
• Conclusion
• 7 Spaces for Business Ethics
• New forms, old problems
• An unfinished revolution
• Codes of conduct and social responsibility
• Corporate culture as the key
• The combination of people and capital
• The bottom of the pyramid
• Part 3 Corporate Governance and Auditing
• 8 The Demise of Andersen: A Consequence of Corporate Governance Failure in the Context of Major Changes in the Accounting Profession and the Audit Market
• The Andersen collapse as a case of corporate governance failure
• Concentration, diversification and loss of independence
• Auditing as the ‘poor relation’ of professional services: the problem and its effects at Andersen
• Conclusion
• 9 Enron et al. and Implications for the Auditing Profession
• Introduction
• Historical role of the auditing profession
• The expanding role of external auditors to identify fraud
• Unanswered questions
• Today, a regulated profession
• 10 Enron Revisited: What Is a Board Member to Do?
• High risk accounting
• Inappropriate conflicts of interest
• Extensive undisclosed off-the-books activity
• Excessive compensation
• Lack of independence
• Fiduciary failure – a Board is not a team
• 11 How to Restore Trust in Financial Markets?
• Introduction
• Public information, valuations and financial market efficiency
• The central role of the gatekeepers of public trust in the new financial landscape
• Why have the gatekeepers of public trust failed?
• A fundamental response is needed to restore public trust
• Part 4 Corporate Culture and Ethics
• 12 Enron: The Collapse of Corporate Culture
• Introduction
• Enron’s corporate culture
• America’s corrupt corporate culture: an educational failure
• Rising from the ashes of Enron: building a sound foundation for corporate culture
• Some concluding thoughts
• 13 Ethics, Courage and Discipline: The Lessons of Enron
• The external response: law and regulation
• The internal response: professionalism
• The character of business professionals
• Business schools and corporate cultures
• 14 Developing Leadership and Responsibility: No Alternative for Business Schools
• The ‘leadership’ dimension
• The ‘responsibility’ dimension
• Leadership and responsibility: two facets of the same challenge
• 15 Ethics for a Post-Enron America
• What went wrong?
• What is to be done?
• Part 5 Conclusion
• 16 Enron: Visiting the Immersed Part of the Iceberg
• Enron, a multi-causal reading
• ‘Financiarisation’: trust in finance
• Loss of bearings – the conflict of interest example
• Beyond ‘financiarisation’: common good at risk
• Index