What Enron Means for the Management and Control of the Modern Business Corporation: Some Initial Reflections

Accounting as a Facilitator of Extreme Narcissism

“…The power of GAAP has been helped by influential institutions and individuals. They have excused accounting from responsibility for the corporate financial and ethical crises of the early 2000s -they have ascribed the causes to 'a few bad apples'; to poorly designed management incentive systems and corporate governance protocols; and have emphasized the ameliorating effect of reforms (see Bratton (2002) and Gordon (2002)). Such blame-shifting and rationalization enhances accounting's socially powerful aura.…”

Toward a More Humanistic Governance Model: Network Governance Structures

“…Some of the security traders in other banks were aware of the risk exposure being accepted. Unfortunately, like the individuals that had early concerns about Enron and many other corporate collapses, there was no systemic way to share these concerns with the board and/or other stakeholders that could have the incentive and capacity to take (Gordon, 2002;Pellegrini, 2002). Had there been such established channels, crucial information could have been retrieved much earlier.…”

The association between audit committees, compensation incentives, and corporate audit fees

“…One possibility is that compensation incentives motivate managers to manipulate earnings. To the extent managers engage in earnings manipulation in order to increase their accounting-based compensation, a higher audit effort would be necessary to detect that earnings manipulation (e.g., Gordon, 2002). Therefore, there may be a positive relation between compensation incentives and required audit effort.…”