Accounting for Fun and Profit

Appendix 6A

How Share-Price Fixation Killed Enron

Originally published on HBR.org July 11, 2013, by Lawrence A. Weiss http://blogs.hbr.org/cs/2013/07/how_share-price_fixation_kille.html

In December, 2001, just prior to filing for bankruptcy, Enron Corporation had approximately $2 billion in cash and no debt coming due. Despite its infamous financial chicanery, it still appeared to be a viable, profitable firm. So why did Enron go bankrupt? Was it because of the fraud, or was there another reason?

At the annual conference of the Association of Certified Fraud Examiners late last month, former Enron Chief Financial Officer Andrew Fastow, who served six years in prison for his part in Enron’s deceptions, offered an explanation. In a keynote speech, ...