The Fall of Enron

Paul  Healy; Krishna  Palepu

Case | HBS Case Collection | November 2008 (Revised July 2019)

The Fall of Enron

Abstract

The case traces the rise of Enron, covering the company's business innovations, personnel management, and risk management processes. It then examines the company's dramatic fall including the extension of its trading model into questionable new businesses, the financial reporting problems, and governance breakdowns inside and outside the firm. The case offers students an opportunity to explore why Enron failed and to understand the systemic problems in governance that affected its board of directors, the audit committee, the external auditors, and financial analysts.

Keywords: Risk Management; Management Practices and Processes; Crime and Corruption; Financial Reporting; Corporate Governance; Governing and Advisory Boards;

Language: English

Format: Print

21 pages

Educators Purchase

Citation:

Healy, Paul, and Krishna Palepu. "The Fall of Enron." Harvard Business School Case 109-039, November 2008. (Revised July 2019.)

Article | Accounting Horizons | March 2020

Voluntary, Self-Regulatory, and Mandatory Disclosure of Oil and Gas Company Payments to Foreign Governments

Paul M. Healy and George Serafeim

Concerns about high rates of government corruption in resource-rich countries have led transparency advocates to urge oil and gas firms to disclose payments to host governments for natural resources. Transparency, they argue, can increase government accountability and mitigate corruption. However, we find a low frequency of voluntary disclosures of payments by oil and gas firms and negative stock price reactions for affected firms at the announcement of regulations mandating disclosure. This suggests that sample firm managers and their investors perceive that such disclosures generate private costs, despite any public benefits. We document that industry self-regulation has generated information to substitute for the gap in voluntary company disclosure and that such disclosures are accompanied by lower country corruption ratings. This suggests that collective action could be an effective way for companies to manage the private costs of disclosure and respond to public pressure for transparency that could provide public benefits.

Keywords: oil ＆ gas; corruption; transparency; self-regulation; industry self-regulation; regulation; disclosure; disclosure regulation; Energy Sources; Crime and Corruption; Corporate Disclosure; Governing Rules, Regulations, and Reforms; Energy Industry;

Citation:

Healy, Paul M., and George Serafeim. "Voluntary, Self-Regulatory, and Mandatory Disclosure of Oil and Gas Company Payments to Foreign Governments." Accounting Horizons 34, no. 1 (March 2020): 111–129. View Details

Cite View Details SSRN Find at Harvard

Tesla’s board of directors proposed an unusual compensation plan for the company’s CEO Elon Musk. The plan payouts were entirely contingent on achieving very ambitious market value, sales, and EBIT targets over the next ten years. If all the targets were achieved, Tesla would be one of the most valuable companies in the world, and Musk would receive the highest compensation of any CEO in U.S. corporate history. If the targets were not achieved, Musk would receive nothing. Proxy advisors (ISS and Glass Lewis) expressed serious reservations about the plan and urged shareholders to vote against it. Should shareholders approve or reject the plan?

Faculty & Research

The Fall of Enron

Abstract

Citation:

About the Authors

More from these Authors

Faculty & Research

The Fall of Enron

Abstract

Citation:

Related Work

About the Authors

More from these Authors