Enron: Market Exploitation and Correction
Financial Decisions, No. 1, Spring 2002
16 Pages Posted: 10 Sep 2011
Date Written: September 9, 2011
This paper chronicles the rise and fall of Enron, Inc., the once powerful energy firm based in Houston, Texas. The history of the firm is reviewed, the November 2001 financial restatement is examined to show the impact of the failure to report the appropriate financial position for the firm, and reasons for the firm’s downfall are considered. While Enron’s decline may currently be considered a market failure, it is likely that the events surrounding the firm in 2001 will ultimately be considered a case in which the market worked to ferret out deception and poor judgment on the part of Enron’s management.
Keywords: Economic History, Enron, Capture Theory, Regulation
JEL Classification: G28
Suggested Citation: Suggested Citation