Accounting/finance lessons of enron a case study

Lessons from Enron

In the late s, Enron was celebrated in the business press for pioneering a new style of business. This success was largely attributed to Skilling, who had first come into contact with Enron when he was a consultant for McKinsey. As part of his work for the Texas energy company Skilling created a new business model for the natural gas pipeline company through the creative application of financial derivatives. At the time, the gas industry was in desperate need of a new approach to business. In the mids, natural gas deregulation ushered in sweeping changes for the industry.

Case Study on the Ethical Issues at Enron

While in the past there had been strict rules that determined both the price of gas and how companies could operate, after deregulation, any company could contract with a pipeline to transport natural gas and, significantly, gas prices were no longer set by regulators. For gas pipeline companies such as Enron, this meant finding entirely new ways to operate.

William Ackman: Everything You Need to Know About Finance and Investing in Under an Hour

Skilling helped solve this problem by drawing inspiration from the innovations taking place on Wall Street. This, of course, was welcome news to industrial buyers of natural gas. Now at Enron fulltime and convinced that this business model could be applied to a range of different industries, Skilling pushed the company into areas beyond natural gas.

Accounting/finance lessons of Enron : a case study / Harold Bierman, Jr. - Version details - Trove

The influence of Wall Street could also be felt inside the company. Skilling changed job titles inside the company to match those found inside large investment banks.


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With Enron, the financialization of the American economy seemed to have reached its pinnacle. Despite his belief that his business strategy could be applied to many different industries, Enron had trouble repeating its early success with derivatives. When the company did finally unravel at the end of , there was widespread public outrage. Write a customer review.

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It did not explain as I had hoped the detailed structure of the extra-Enron entities that facilitated the scandalous accounting. It did not tell me anything I didn't already know. It is principally an exoneration of the villains Lay and Skilling, reserving the author's ire for their creature Fastow.

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