Overview of the Book

This book ranges widely over the different aspects of corporate practice and governance, law and ethics involved in the Enron case, and of the policy responses to the recent corporate scandals in the USA and internationally. Broadly, they can be classified under the following headings: Transactions and institutional structure. Major subjects here are Enron’s use of transactions such as derivatives and of institutions such as special purpose entities (SPE) to restrict the transparency of its operations. These practices have posed a major challenge to corporate governance. Accounting and auditing. This heading is closely related to the first, since the opaqueness of Enron’s operations was reflected in its financial reports and the accounting firm, Arthur Andersen, also served as adviser and consultant regarding the design and conformity with regulations of many of its transactions. Corporate governance. High-quality accounting and auditing are necessary for good corporate governance, but other parties — such as the firm’s Board of Directors its regulators, its banks and investors, credit rating agencies and investment analysts — all have essential roles here. These socalled ‘gatekeepers’ fell short in the performance of their duties in the Enron case. Failures under this heading have helped to shape recent reforms.