Inside Arthur Andersen: Shifting Values, Unexpected Consequences

Chapter 3. Growth before the Storm

At Arthur E. Andersen’s death, the partnership was thrown into a crisis. Arthur E. Andersen had hopes that his son, Arthur A. Andersen, would take over the firm after his retirement or death. But his son walked away from his father’s firm in 1943, leaving him without provisions for succession. The remaining 25 partners were restricted to two choices: Disband the firm or continue it as a partnership.

Their choices were limited by federal regulation. In reaction to the crisis following the 1929 stock market crash, which touched off a long period of global economic depression, the SEC was created. In one of its first actions, the SEC moved to limit potential for conflict of interest in public accounting firms by ...