The Collapse Of Enron Corporation

1787 Words Nov 18th, 2014 8 Pages
“When a company ascends to the number seven spot on the Fortune 500 and then collapses in weeks into a smoking ruin, its stock worth pennies, its CEO, a confidante of presidents, more or less evaporated, there must be lessons in there somewhere.”

-Daniel Henninger, The Wall Street Journal

The collapse of Enron Corporation has created many discussions about the structure of corporate governance. The question of this essay first calls to examine some of the strengths and weaknesses of the shareholder model of corporate governance and how the fundamental principles of this model were instrumental in the disintegration of Enron. In particular, I will discuss Deakin’s article about the third position addressing how Enron’s profit driven culture and the executive focus on short-term profitability hindered them from being an ethically and legally driven company for long-term investments (Deakin and Konzelmann). Enron, at its early stages was a success for the shareholder model but it was that same model that is to blame for the demise of Enron. I will argue that the adoption of the theoretical characteristics of the shareholder model helps us identify what could have prevented the downfall of Enron and how future corporations can learn from what was done and be dissimilar to Enron.
The Enron case created a reevaluation of corporate governance and a revolution of accountability between corporation and shareholder. Many theorists believe that the Enron case showcases the…

More about The Collapse Of Enron Corporation

Open Document