One of the main issues with the Enron collapse was the activities of their C.E.O., Jeffrey Skilling. Not only was he in charge of controlling one of the largest energy companies in the world, he was also in charge of many other side undertakings that may have been in a conflict of interest with his main job as Chief Executive Officer of Enron. The baffling part of this situation was that the other members of the Board of Directors for Enron all voted on this and passed it. Top firms need to be more meticulous in the members they choose and make sure that they will stand up to the C.E.O. if they feel there is a conflict of interest in place.

There are three specific ways in which Enron misrepresented figures on its financial st

Due to the behavior of Enron, many groups have been affected in the short-term and will continue to be affected in the longer term. Due to the massive losses incurred by Enron stockholders, the Financial Accounting Standards Board (FASB) will likely pass new rules that make it harder for companies to deceive auditors and investors as long as Enron did. After seeing many investors lose their money, pension-holders at other companies have been diversifying their holdings to prevent a massive loss of their own. At the moment, it’s not clear how much Arthur Andersen knew about these deceptive practices. Assuming they were misled as much as investors, there will be pressure for independent auditors to both do a more thorough job of investigating a company and be more independent from that company. “Many auditors are too cozy with their clients to even think about independence. It’s not uncommon for auditors to be feted at fancy restaurants or to receive country-club perks from clients.” The current practice of giving perks to auditors will likely go away. Finally, the auditing board of a company’s board of directors has not taken a huge role in making sure the auditors do their job. Most auditing committees meet only four times a year.

Another problem exists on the analysts’ side of the equation. Many investment firms and brokerage houses have conflicts of interests with some of the firms whose stocks they are pushing on their clients. According to the Associated Press “Eleven of 16 analysts who followed Enron were still rating it a ‘buy’ or ‘strong buy’ as late as Nov. 8, two

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