Sox and backdating

" The CEO of a company must have pristine ethics if there is to be any hope of ethical behavior from the employees.CFO Andy Fastow operated (and partly owned) LJM partnerships.For each measure, we discuss causes of variation in the measure as well as consequences.

I was stuck in Third World countries where I didn't speak the language without a hotel room or with an insufficient airline ticket home despite paperwork that indicated otherwise. I would try using a different agency, but after one or two expense reports, I'd get a finger-wagging voice mail or e-mail reminding me that I needed to use Enron's preferred agency, Travel Agency in the Park; we all called it Travel Agency in the Dark. He was in effect letting his managers know that once you get to the executive suite, the company's assets are there for you to move around to yourself or your family.

Thanks to Anwer Ahmed, Dan Givoly, Krishnan Gopal, Ilan Guttman, Michelle Hanlon (the editor), Christian Leuz, Sarah Mc Vay, Shiva Rajgopal, Terry Shevlin, Nemit Shroff, Doug Skinner, Richard Sloan, Ann Tarca, and Rodrigo Verdi for helpful comments.

The framework for this review is based on Schrand’s discussion of earnings quality at the April 2006 CARE Conference sponsored by the Center for Accounting Research at the University of Notre Dame.

Enron was at one time the seventh largest company in the United States, based on Total Revenues.

It collapsed into bankruptcy without ever reporting a losing quarter.

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