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Learning from Enron

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  • Simon Deakin
  • Suzanne J. Konzelmann
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    Abstract

    This essay argues that the Enron affair has been misunderstood as a failure of monitoring, with adverse consequences for the drafting of the Sarbanes-Oxley Act and the Higgs report. Where Enron’s board failed was in underestimating the risks that were inherent in the company’s business plan and failing to implement an effective system of internal control. Enron demonstrates the limits of the monitoring board and points the way to a stewardship model in which the board takes responsibility for ensuring the sustainability of the company’s assets over time.

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    File URL: http://www.cbr.cam.ac.uk/pdf/WP274.pdf
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    Bibliographic Info

    Paper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp274.

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    Date of creation: Sep 2003
    Date of revision:
    Handle: RePEc:cbr:cbrwps:wp274

    Note: PRO-2
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    Web page: http://www.cbr.cam.ac.uk/

    Related research

    Keywords: Enron; corporate governance; shareholder value; internal control; non-executive directors; monitoring board; stewardship;

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