The Social Impact of Business Failure: Enron

Abstract

Between October and November 2001 the world witnessed the collapse of Enron, a major US publicly traded corporation with global operations. The Enron case highlights the impact corporate failure has on American society and capital markets and underscores the need for better enforcement of regulations and ethical business behavior. This paper discusses the role played by Enron’s senior management, its board of directors, Enron’s auditors, consultants, bankers, Wall Street and the government, in the spectacular rise and fall of this corporate giant. It also examines the impact of Enron’s failure on its employees, the employees of Andersen, and on thousands of ordinary Americans who invested in the stock via their pensions and mutual funds. This paper highlights the conflicts of interest that pervade the financial system and discusses the social and financial impact of a combined business and oversight failure. Students and teachers of finance, corporate governance, and business strategy may be interested in this paper as a pedagogical tool to teach undergraduate finance, business ethics, business strategy, and corporate governance.

Citation

Sridharan, U.V., Dickes, L. and Royce Caines, W. (2002), "The Social Impact of Business Failure: Enron", American Journal of Business, Vol. 17 No. 2, pp. 11-22. https://doi.org/10.1108/19355181200200006