Open AccessThe Fall of Enron
Author(s) -
Paul M. Healy,
Krishna G. Palepu
Publication year - 2003
Publication title -
the journal of economic perspectives
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 9.614
H-Index - 196
eISSN - 1944-7965
pISSN - 0895-3309
DOI - 10.1257/089533003765888403
Subject(s) - intermediary , corporate governance , incentive , stock market , capital market , business , financial intermediary , accounting , financial system , finance , economics , market economy , paleontology , horse , biology
The financial reporting and disclosure problems at Enron, as well as the high market valuations for its stock raise troubling questions about the functioning of capital market intermediaries, regulators and governance experts whose are supposed to ensure the effective functioning of the stock market. This paper examines the functions of key capital market intermediaries and analyzes how their own governance and incentive problems may have contributed to Enron's rise and fall. We conclude by proposing system modifications to resolve the observed problems.
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