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The bankruptcy of Enron and the subsequent demise of Arthur Andersen brought intense scrutiny to the accounting profession. That these events would have an effect on auditor going concern modification judgments and accounting regulation would not be surprising. This study aims to look at 1,204 publicly traded firms that filed bankruptcy in the period January 1, 1997 through December 31, 2005.

The observations are divided into pre‐Enron and post‐Enron periods. The paper finds the 18 largest bankruptcies represented 47 percent of the total assets entering bankruptcy in this period.

The going concern modification rate in the pre‐Enron period was 44.5 percent, in the post‐Enron period, 61.9 percent. Findings show auditors, in the presence of a consistent standard, nevertheless modify their decision making as a result of external events. This study further looks at the impact of outliers on this decision and on differences by firm size.

By considering the entire population of publicly traded firms filing bankruptcy, overall implications and statistics are provided. This method does not allow the use of certain traditional modeling techniques.

The research shows auditors, despite a consistent standard, vary their going concern judgments based upon external events. The paper also suggests that “one size fits all” regulatory models may not be cost effective across the population of public firms.

The research provides a summary of the characteristics of the population of firms filing bankruptcy for an extended period across a changing reporting and regulatory environment.

The bankruptcy of Enron Corp. has evolved into a scandal of enormous proportions involving allegations of fraud, corruption and unethical practices on the part of Enron’s corporate executives, members of its board of directors, external auditors, and high government officials in the USA. No doubt there will be many articles written about various aspects of the Enron scandal. The focus of this paper is on the relationships between Enron’s business model and the deregulatory phase of the American economy during the 1980s and 1990s. It is the argument of this paper that deregulation in the US electricity and natural gas industries fostered the creation of the Enron business model, and that this model was unsustainable, resulting in the demise of Enron Corp. Furthermore, while Enron can be viewed as an example of capitalistic excess, the paper reveals how the Enron business model developed as an American form of a public private partnership, similar to the types of public private partnerships that have been created in recent years in the UK. Investigating Enron as a public private partnership may help us to better understand the role of public private partnerships in contemporary capitalism and shed some light on the advisability of deregulatory schemes and the unintended consequences that can result from such schemes.

Throughout sport, the incidence of commercial sponsorship is increasing and shows no signs of slowing. This case study examines the negative consequences that can arise when a corporate stadium naming rights partner (Enron) becomes embroiled in financial and ethical controversies and how its collapse affected the team that uses the stadium for its home games (Major League Baseball's Houston Astros). It examines public relations strategies and tactics the Astros used to disassociate themselves from Enron and to recapture public support.

It has been said that standards issued by the International Accounting Standards Board (IASB) are more congruent with a principles-based approach to standards setting than those of the Financial Accounting Standards Board (FASB). Revelations concerning accounting manipulations at Enron Corp., and the ensuing scandal resulting from these revelations, have prompted the FASB to reassess its approach to accounting standards setting with the possible intent of moving FASB standards-setting processes closer to a principles-based approach. One area that IASB standards tend to emphasize more than FASB standards is the concept of substance over form. The bankruptcy of Enron Corp. provides a vivid illustration of how companies may use the legal form of transactions to obscure their economic substance. The purpose of this chapter is to examine the concept of substance over form by investigating Enron’s use of misleading accounting practices in the following areas: (1) off-balance sheet financing; (2) revenue recognition; and (3) financial statements disclosures. In these three areas of accounting concern, the chapter sets forth the relevant US Generally Accepted Accounting Principles (US GAAP) requirements, along with the ways in which Enron manipulated GAAP while concealing the economic substance underlying the transactions. It is the argument of this chapter that had the concept of substance over form been properly applied at Enron, investors and creditors would have been provided with a more realistic view of the company’s financial position and its results of operations, perhaps avoiding what became the one of the largest corporate bankruptcies in US history. The conclusion is that the FASB should focus on the concept of substance over form as it contemplates moving toward a principles-based approach to accounting standards setting.

Organization theory and management studies rely on a representational idiom to account faithfully for empirical data, but such research ideals do not always apprehend what is essential in the case at hand. Comedy and the comical remain an underutilized resource within, e.g. the critique of power imbalances and imprudent or illicit behavior in corporations, providing an entirely different set of mechanisms that do not sketch the “broad picture” but target elementary and constitutive empirical data. The purpose of this paper is to explore the possibilities for using such resources in management studies writing.

This paper uses the literature addressing the Enron bankruptcy as an exemplary case wherein an analytical framework recognizing a comic outlook of life can be fruitfully applied. Additional cases are presented to substantiate the proposed model.

The paper advocates a broader repertoire of analytical practices in organization studies, including techniques and modes of representation used in comedy.

The paper proposes a minor literature within management studies, drawing on a performative idiom and the use of comedy techniques, including the debasing of social situations, to extend the repertoire of styles. In the end, such a minor literature may be able to grapple with the current situation, characterized by organizational absurdities that preclude the use of a representational idiom.

The purpose of this study is to examine whether credit ratings inform auditors' going‐concern (GC) audit opinions for companies facing imminent bankruptcy.

Using data from BankruptcyData.com the authors identify US publicly‐held, financially‐distressed companies that filed bankruptcy from January 1, 2000 through June 30, 2009. Logistic regression is applied by regressing audit opinion type on select financial, industry, and credit rating data.

Results show that the likelihood of an auditor issuing a GC opinion is associated with the credit rating issued by Standard & Poor's (S&P) preceding the audit report date. In results supporting the idea that the auditor's opinion has informational value, the paper also finds that after issuance of a GC report, S&P's credit rating tends to be downgraded.

While the findings indicate observable relationships between audit opinions and credit ratings, the models used in primary analysis cannot determine causality.

This study sheds some light on how credit ratings and audit opinions may be inter‐related in distressed companies, an issue previously not investigated in the literature.

This paper will demonstrate that the continuous evolution of the accounting profession is in response to the major problems and regulations that exist in any given period. This metamorphosis yields opportunities, challenges, and sometimes results in stark contradictions that the profession must struggle with in order to go forward. The accountant has undergone a dramatic change during the 20th century. The transition from a bookkeeping and tax preparation role to one of a strategic management consultant has been dramatic. Accountants have moved from the back office to the front office. They have often redefined their roles from information processors to strategic business advisors. The key drivers that brought about this change in role include mass production, increased competition among accounting firms, advances in information technology, saturation in the audit service market, pressures on audit service partners, globalization, and the ever changing regulatory environment. This paper examines these changes in light of the challenges of the profession during the early 21st century.

This article provides an analysis of the economic incentives and financial reporting for Special Purpose Entities (SPEs) over the last four decades. The analysis explains economic factors motivating business use of SPEs and the origins of SPEs in lease accounting and securitization transactions. Related financial reporting standards are identified and discussed, including the historical shift from a traditional control viewpoint to a primary beneficiary viewpoint for financial reporting for consolidation for SPEs (recently renamed Variable Interest Entities (VIEs) in U.S. Financial Accounting Interpretation 46R). The article also includes illustrative journal entries explaining SPE transactions from both the viewpoint of the creating company(s) and the SPE. Actual financial reporting examples and/or journal entries for SPEs created by Bank of America, General Motors Acceptance Corporation, Lucent Technologies and Alza Pharmaceuticals Corporation are also provided.

With the bankruptcy of Enron and the accompanying loss of pension benefits of its employees, pensions have recently received significant press. Accounting for pension plan obligations, for defined benefit plans in particular, requires companies to make assumptions regarding discount rates, projected salary increases, and expected long‐term return on plan assets. Such assumptions, in turn, determine the funding status of the pension plan and the annual pension expense. Higher assumed discount rates reduce the pension obligation, enhance the funding status of the plan, and reduce any lump‐sum payments. Higher expected return on assets reduces the current pension expense. This study investigates the relationship between pension plan assumptions and the funding status of a pension plan. The results reveal that companies with pension plans that are more fully funded assume higher discount rates and expected long‐term return on assets than do companies with less funded plans. The effect of these assumptions is that higher discount rate assumptions lead to better funding status, and higher expected long‐term rates of return on assets partially offset the pension expense impacts of these higher discount rate assumptions. We are doubtful that more funded plans collectively should be assuming higher discount rates and expected long‐term return on plan assets, especially since the actual return on plan assets investigated did not correlate with these assumptions.