Day+28-29+Enron+IV+1-3+Nov+2010

Day+28-29+Enron+IV+1-3+Nov+2010 - Enron IV Enrons Fall Nov...

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Click to edit Master subtitle style 2/4/11 Enron IV: Enron’s Fall Nov. 1st-3rd, 2010 1. What precipitated Enron’s fall? 2. The shareholder value conception of the firm, redux 3. Enron fallout: The Sarbanes-Oxley Act of 2002 4. Looking ahead to next week: How effective was Sarbanes-Oxley???
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2/4/11 Enron’s growth was sustained by: Manufacturing an appearance of risk control Gaming accounting rules Structured finance (including the SPEs)
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2/4/11 After the dot-com bubble burst, investment analysts stopped believing Enron’s monotonously optimistic financial projections and “everything’s great” statements.
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2/4/11 Shareholder Value, revisited Under the shareholder value conception of the firm, the capitalist enterprise is understood as an instrument for maximizing returns to investors Share price becomes the key measure
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2/4/11 Shareholder value-dominated firms create new businesses not because they’re profitable but because Wall Street goes ga-ga over them (e.g., Enron Intelligent Network, Enron Broadband)
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2/4/11 Obsession with shareholder value increases the role that the financial community plays in making strategic decisions General Motors, once again: this suggests that the triumph of finance interests over manufacturing interests
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This note was uploaded on 02/04/2011 for the course SOC 110 taught by Professor Powers during the Fall '07 term at Berkeley.

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Day+28-29+Enron+IV+1-3+Nov+2010 - Enron IV Enrons Fall Nov...

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