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Learning from Enron

Author

Listed:
  • Simon Deakin
  • Suzanne J. Konzelmann

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.

Suggested Citation

  • Simon Deakin & Suzanne J. Konzelmann, 2003. "Learning from Enron," Working Papers wp274, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp274 Note: PRO-2
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    File URL: https://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp274.pdf
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    References listed on IDEAS

    as
    1. Audretsch, David B & Lehmann, Erik E & Warning, Susanne, 2003. "University Spillovers: Strategic Location and New Firm Performance," CEPR Discussion Papers 3837, C.E.P.R. Discussion Papers.
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    More about this item

    Keywords

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

    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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