Enron: A Case Study in Corporate Governance Failure

Over time, numerous measures have been enacted to improve corporate governance and
ensure integrity in the management of a company’s operations. Although many
contemporary organizations have adopted the pillars of accountability and transparency in
financial reporting, cases of misappropriation and embezzlement of resources in publiclyheld
entities are still common. In fact, a series of corporate scandals led to huge financial
losses for millions of shareholders, prompting accounting bodies and government agencies
to devise more stringent measures to deal with unscrupulous directors. The collapse of
renowned public corporations such as WorldCom, Enron, and the Lehman Brothers served
as a wakeup call for governing bodies. Consequently, the responsibility of company
executives was reviewed and reaffirmed with the formulation of stringent laws that protect
shareholders from the greed or ignorance of corporate directors. This chapter highlights the
consequences that arise from the failure of corporate governance mechanisms by focusing
on the Enron saga.