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Enron — Pride Comes Before the Fall

In: Corporate Ethics and Corporate Governance

Author

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  • Alejo Sison

    (University of Navarre)

Abstract

At first it seemed as if Enron was just too big, just too important and just too valuable to fail (Walker 2002). It ranked seventh among the world’s largest corporations in the Fortune 500 list, and for six consecutive years since the mid-1990s, it was voted “America’s Most Innovative Company”. During that period, Enron reported an almost eight-fold increase in sales from $13.3 billion to $100.8 billion, with a market capitalization of $63 billion. Its financial statement in 2000 reported a record-setting net income of $1.3 billion, with recurring earnings per share up by 25 per cent, and a total return to shareholders of nearly 89 per cent. Even as late as 2001, Enron’s board of directors was named the third best board in the US by Chief Executive magazine. Yet on 3 December 2001, the unbelievable became inevitable and Enron became the largest corporation ever to file for bankruptcy in American history (Oppel & Sorkin 2001). Enron and its affiliates sought Chapter 11 court protection for assets worth $49.8 billion and debts of $31.2 billion. The air was heavy with accusations of accounting fraud, insider trading and other securities law violations.

Suggested Citation

  • Alejo Sison, 2007. "Enron — Pride Comes Before the Fall," Springer Books, in: Walther Ch Zimmerli & Markus Holzinger & Klaus Richter (ed.), Corporate Ethics and Corporate Governance, pages 129-136, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-70818-6_10
    DOI: 10.1007/978-3-540-70818-6_10
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