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Essay / Research Paper Abstract
This 3-page paper analyzes John Coffee's article "Understanding Enron: It's the Gatekeepers, Stupid." Bibliography lists 2 sources.
Page Count:
3 pages (~225 words per page)
File: AS43_MTundeenro.rtf
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Unformatted sample text from the term paper:
explain just how the implosion actually occurred. John C. Coffees treatise, "Understanding Enron: Its About the Gatekeepers, Stupid" offers the explanation that the so-called "gatekeepers" hired to spot fraud, were
as much at fault as the companys untrustworthy management. With the term "gatekeeper," Coffee refers to "reputational intermediaries who provide verification and certification services to investors." In other words, in
this case, Arthur Andersen, the debt rating agencies, investment bankers and attorneys. But why were the gatekeepers asleep at the switch
in the Enron scenario? One reason, as we now know, is that Arthur Andersen was afraid of losing Enron as a client if it took too close a look at
the books. But Coffee also points to the fact that the entire financial reporting climate, in general, eroded during the 1990s, allowing questionable earnings to be accepted as valid truth
to support the continually climbing stock market. However, Coffee reminds us, it wasnt just Arthur Andersen that created issues - he
notes that as late as October 2001 (just weeks before the implosion), 16 out of 17 security analysts covering Enron maintained "buy" or "strong buy" recommendations.
Coffees theory is that the legal climate for investment fraud sharply declined throughout the 1990s (allowing everyone to look the other way when questionable figures
made their way into a balance sheet). He also points out that the Enron-Arthur Andersen client/auditor relationship got in the way of Arthur Andersens ability to do its job (i.e.,
detect fraud). Finally, Coffee blames the "market euphoria" of the late 1990s, an arena in which gatekeepers became, in Coffees words, "temporarily irrelevant." Overall, he notes, the gatekeepers "reputational capital"
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