Gerald Vinten

The corporate governance lessons of Enron

The failure of the Enron Corporation in late 2001, apart from signalling the largest corporate bankruptcy in the USA, has also thrown up a myriad of questions about the effectiveness of contemporary accounting, auditing and corporate governance practices. There are strong historical antecedents for distrust of the corporation, latterly represented in extreme form by the anti‐capitalists. The causes of the Enron failure and the immediate response in the USA are outlined. This is followed by the response in the UK among the accountancy bodies, and the results of a comprehensive survey to assess the impact of Enron. This then leads to a comprehensive series of lessons to be learnt in the form of recommendations under the headings of serving the public interest, accounting and financial reporting, auditing, corporate governance, and education.

The stakeholder manager

All managers and directors are faced with real, or imagined, conflicts of interest or competing demands for time and resources, between shareholders and stakeholders. This has always been the case, but the contemporary emphasis on stakeholders has brought this to a head. Although the more astute organisations, managers and directors maintain a suitable balance between the various demands placed on them, and there are systematic ways to do this, there are a few voices opposed to stakeholding in any shape or form. In order to suggest that stakeholding is the viable, inclusive and sustainable way for companies to proceed, the article considers and criticises the anti‐stakeholder arguments, before bringing in endorsements and suggesting the way forward.

Challenges and opportunities in mergers and acquisitions: three international case studies – Deutsche Bank‐Bankers Trust; British Petroleum‐Amoco; Ford‐Volvo

Explores the challenges and opportunities in integration processes, and the factors responsible for the success of cross‐boarder acquisitions within related industries. Emphasises the corporate strategies the three partnered companies used to maximise synergies, and to minimise the negative effects of the unavoidable, but necessary and complex, acculturation process. Evidence extracted from these case studies highlights that successful co‐operation between the firms resulted from the learning process developed by the partners. Knowledge acquisition and the subsequent organisational learning were the important desirable outcomes of the acquisition processes experienced by the organisations under study. The paper is structured as follows: a literature review on integration strategies and cultural impact on mergers and acquisitions precedes the three success stories. Accounts originating from semi‐structured interviews with top executives of Deutsche Bank – Bankers Trust; British Petroleum – Amoco; and Ford – Volvo are compared and contrasted with the literature. Outlines the results achieved in this self‐contained initial stage of an ongoing research project.

Corporate Governance and the Sons of Cadbury

Corporate governance has emerged from obscurity into being a mainstream topic about which there is a need to know, as well as being incorporated into industrial and commercial training courses. There has been a plethora of reports starting in the USA and spreading to the UK, which has then produced a series of reports whose influence, example and model has spread throughout the world. Some main forces explaining the provenance of corporate governance are provided before discussing the US Treadway and COSO Reports. Concerns with business ethics also are a factor. These reports in turn influenced the Cadbury Report and the “Sons of Cadbury” the most recent and most significant being the recent Turnbull Report. This impacts much more on grass roots practices than the others, and its messages therefore need to be absorbed into training courses.

Entrepreneuring in education

Encouraging entrepreneurship has become an accepted wisdom in economic management and government policy. It could only be a matter of time before the world of education was invoked as a means of furthering this end. Business schools have not made the most incisive contribution possible, and there is a significant expectations gap. So as we cascade down to the secondary level, efforts are being made to improve matters. The initiative of the National Foundation for Teaching Entrepreneurship is outlined, and research results relating to impact are provided. This is a systematic and comprehensive approach, which started in the USA and has currently spread abroad. It has been well received, and is a suitable means of planting seeds that may come to fruition in later life. It is an action learning approach, which is an excellent vehicle for teaching business studies. It has proved itself in widening access to under‐privileged groups.

Enronitis – dispelling the disease

“Enron” has become less the name for a company than a shorthand for mammoth abuse of financial reporting and corporate governance of a variety so egregious as to be almost unbelievable. Across the world there is debate in conferences and regulatory bodies as to whether “Enron” can happen in this or that country. Few if any are so complacent as to consider that they are immune from Enronitus. While America bolts the stable door after the event, or in the high likelihood that there will be another Enron waiting in the wings, other countries are taking preventive measures. A multi‐dimensional and inter‐professional approach is required to combat Enronitus. Main headings are protecting the public interest, accounting and financial reporting, auditing, corporate governance and education. Careful integration of these factors is necessary if there is to be any discernible impact on the problem. Complex issues require complex solutions.

Open versus closed questions – an open issue

In our constant asking of questions in our organizations we use a combination of open and closed questions. This is generally done in a haphazard manner according to custom or spontaneity. Argues that research evidence suggests there are appropriate contexts and occasions for the use of either type. Sets out the pros and cons in tabular form. Finds it is possible to obtain different responses according to the type of question. Claims that this is an unrecognized finding which has to be worrying to managers and organizations which may be making wrong decisions due to such misplaced questioning. States that a more conscious approach to questioning, with an awareness of what is likely to succeed in obtaining accurate response and what is not, should improve the efficiency and effectiveness of an organization′s workings.

WhistleBlowing: Corporate Help or Hindrance?

A series of case studies of whistle‐blowers suggests that most suffer harm of one sort or another, however justified their cause. Research on whistle blowing shows that the average whistle‐blower in all other respects could be regarded as a model employee, and it is therefore a pity for the organization to forfeit his/her services. This leads to the conclusion that organizations should try to harness the energies of their whistle‐blowers, and a suitable code of practice can assist in this. Protection under the law is better in the USA than the UK.

Whistleblowing: the UK experience. Part 1

An historical saunter is taken through the development of approaches, legal and organisational, to deal with whistleblowing. Whistleblowing engenders strong emotions, and it is not surprising that some of the early pioneers met with stiff resistance. Some classic whistleblowing cases are analysed, notably Stanley Adams and charge nurse Graham Pink. Key developments and cases during the Thatcher period are outlined. Employment law was rather primitive, and failed to give much definitive protection to whistleblowers. The contribution of the Committee of Lord Nolan on Standards in Public Life is outlined. The area of higher education, and the pivotal territory of financial services, accounting and auditing also are treated.

Thriving on Chaos: The Route to Management Survival

Chaos theory is about to invade the thinking and vocabulary of practising managers and management academics. It will mark the major breakthrough in the 1990s, just as systems theory represented the great step forward three decades ago. Indeed, it may be regarded as a natural extension of systems theory. Provides an explanation of what chaos theory means in the light of some important scientific developments which may now be viewed as superseded. Explores the connection with management thinking through a number of major management writers who display an implicit awareness of chaos. A discussion considers the interrelationship between order and disorder, and the significance for creativity and leadership in organizations. Managers need to thrive on chaos, and to revamp some deeply entrenched attitudes if they are to succeed in the midst of an operating environment that is less stable and predictable.