Enron Corporation: A sinful company with equally sinful history

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Dimitrios V. Siskos

SMC Swiss Management Center University, Switzerland

ABSTRACT: Manipulations with the financial statements have become a common element of the corporate financial life. As such,

Enrons failure in 2001 represents the biggest business bankruptcy ever while also spotlighting the inefficiency of detecting

financial fraud in the early stages. Particularly, the financial statements in Enron Corp. were made up and all loses were hidden

and covered by the accountants. Enrons collapse led employees and investors into failure, while most of the companys

executives were accused for fraud and some of them went to prison. Using the financial statements filed by Enron in the U.S. SEC

Edgar database and employing tools such as Altmans Z-score, the Beneish model as well as nonfinancial measures, this paper

aims to determine whether Enrons fraud could have been detected sooner. The paper concludes that all ratios indicate that

Enrons difficulties were apparent a lot earlier than 2001. These ratios aren't silver bullets but did prove to be consistent

indicators of financial fraud problems. Enron failed but its lessons will long endure.

KEYWORDS: Enron, Bankruptcy, Fraud, Altman, Z-score, Beneish, Predictability, Financial Distress, Financial Statements.

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Dimitrios V. Siskos has been working in both academia and industry sector since 2005. Currently, he is the Deputy Accounting
Manager of a big Wine Company with well-established products located in Thessaloniki, Greece. At the same time, he is as an
Adjunct Assistant Professor at Embry-Riddle Aeronautical University, Worldwide College of Business. He focuses on continuous
improvement, loves precise and accurate data and is willing to add value to the organization / university. Finally, he is the owner
and the administrator of the website: http://www.thinkingfinance.info, where you can find stuff of his Research, Projects, and
Writings.