Learning from Enron
AbstractThis 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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Bibliographic InfoPaper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp274.
Date of creation: Sep 2003
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Web page: http://www.cbr.cam.ac.uk/
Enron; corporate governance; shareholder value; internal control; non-executive directors; monitoring board; stewardship;
Find related papers by JEL classification:
- G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
- K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
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- NEP-ALL-2003-10-20 (All new papers)
- NEP-HIS-2003-10-20 (Business, Economic & Financial History)
- NEP-LAW-2003-10-20 (Law & Economics)
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