IDEAS home Printed from https://ideas.repec.org/a/bla/jacrfn/v13y2001i4p39-49.html
   My bibliography  Save this article

Transforming Enron: The Value Of Active Management

Author

Listed:
  • Vince Kaminski
  • John Martin

Abstract

Soon after Enron was formed as a regulated gas pipeline company in 1985, economic events forced a dramatic reorganization of the company. The result was the creation of an unregulated energy trading operation whose mission was to capitalize on opportunities arising from the deregulation of the natural gas market The initial form of the new business was that of a “gas bank” in which Enron became an intermediary between buyers and sellers of gas, locking in the spread as profit. Since there was no source of liquidity to the market, Enron had to develop its own risk management system. Furthermore, the need to respond quickly to rapidly changing market conditions required that Enron flatten its organizational structure and hire new people whose skills were better suited to the new decentralized organization. The focus of the new Enron accordingly became human and intellectual capital, not physical assets. Employees were encouraged to move about the firm to staff new business ventures. And in what may well be a unique feature in corporate America, Enron's top management today uses its human capital flows to guide its allocations of financial capital. Other aspects of the Enron model include attempts to capitalize on the option (as opposed to current DCF) value of assets, recognition of the value of networks in adding value to trading platforms, and the use of mark‐to‐market accounting for business transactions as a means of ensuring transparency and promoting timely decision‐making.

Suggested Citation

  • Vince Kaminski & John Martin, 2001. "Transforming Enron: The Value Of Active Management," Journal of Applied Corporate Finance, Morgan Stanley, vol. 13(4), pages 39-49, January.
  • Handle: RePEc:bla:jacrfn:v:13:y:2001:i:4:p:39-49
    DOI: 10.1111/j.1745-6622.2001.tb00425.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1745-6622.2001.tb00425.x
    Download Restriction: no

    File URL: https://libkey.io/10.1111/j.1745-6622.2001.tb00425.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arabella Mocciaro Li Destri & Anna Minà & Pasquale Massimo Picone, 2024. "Corporate social irresponsibility and stakeholders’ support: evidence from a case study," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 28(1), pages 37-62, March.
    2. Linsley, Philip M. & Shrives, Philip J., 2009. "Mary Douglas, risk and accounting failures," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 20(4), pages 492-508.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jacrfn:v:13:y:2001:i:4:p:39-49. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1078-1196 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.