Enron: The Good, The Bad, The Lessons

Abstract

The recent bankruptcy of Enron provides many opportunities for learning in all business disciplines.  Beyond the obvious questions, such as “How could a company as large as Enron fail?” and “Why didn’t Arthur Andersen provide adequate assurance?” lies a host of additional equally interesting questions.  Why didn’t external financial analysts detect problems earlier? Could the SEC and other regulators have done more to bring problems to light?  Why was Sherron Watkins a lone voice in asking for an explanation? 

Beyond the immediate Enron debacle lies additional questions.  How can we detect other companies in similar difficulty?  What changes can we expect in accounting and auditing standards?  What changes have occurred or can we expect in the oversight of businesses and auditors?

 This paper will provide a timeline of Enron developments, an analysis of the above questions, and additional discussion questions and teaching resources to foster critical thinking in the classroom.