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Learning from Enron
Author(s) -
Deakin Simon,
Konzelmann Suzanne J.
Publication year - 2004
Publication title -
corporate governance: an international review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.866
H-Index - 85
eISSN - 1467-8683
pISSN - 0964-8410
DOI - 10.1111/j.1467-8683.2004.00352.x
Subject(s) - accounting , stewardship (theology) , business , control (management) , plan (archaeology) , sarbanes–oxley act , internal control , sustainability , management , audit , economics , political science , law , archaeology , politics , history , ecology , biology
This paper argues that the Enron affair has been misunderstood as a failure of monitoring, with adverse consequences for the drafting of the Sarbanes‐Oxley Act and the Higgs report. Where Enron's board failed was in misunderstanding the risks which were inherent in the company's business plan and failing to implement an effective system of internal control. Enron demonstrates the limits of the monitoring board and points the way to a stewardship model in which the board takes responsibility for ensuring the sustainability of the company's assets over time.