Susanne Trimbath

Before the Enron Collapse: What Corporate CFOs Around the World Said About the Status of Accounting and Disclosure Practices

Corporate Chief Financial Officers (CFOs) in many countries at different levels of development and in various parts of the world considered financial statement disclosure and corporate corruption to be serious corporate problems long before the Enron debacle. This paper presents the results of a survey of CFOs conducted across 40 countries during the fall of 2000 and the spring of 2001. Most of the respondents, including those in the United States, considered the lack of adequate disclosure of information by companies to be a bigger issue than either corrupt business practices or a lack of effective accounting guidelines. Only in the United Kingdom did more CFOs consider the lack of effective accounting guidelines to be an issue of more concern than the lack of disclosure.

The U.S. Savings and Loan Crisis in Hindsight 20 Years Later

In the 1980s, the U.S. experienced its worst bank problems since the Great Depression. The problems occurred despite an elaborate bank regulatory structure. The obvious conclusion is that the existing structure was not appropriate for fulfilling its assigned responsibilities. Although banking institutions are now in overall good financial condition and bank regulation has been significantly improved, there is still an ongoing debate over the exact way in which to “modernize” the legal definition of a bank. Perhaps the most important lesson from the recent past in the U.S. is that the most appropriate way for all countries to proceed is by viewing banks not in isolation, but instead as an integral part of a much larger financial system. And a financial system that is increasingly global in nature and constantly evolving in response to new developments. Such a broader perspective suggests that relying less on extensive bank regulation and more on market discipline is the best way to proceed.