1、中文 3720 字， 2068 单词 出处 : Bethany Mclean,Peter Elkind.Social Research:What Went Wrong?Accounting Fraud And Lessons From The Recent Scandals.No.4.2008. 原文 : What Went Wrong?Accounting Fraud And Lessons From The Recent Scandals Corporate fraud,bankruptcies,and various illegal acts have always been part
2、of the business environment. Every time fiascos erupt there is a shock, but business history records dozens of major failures,frauds, and other measures of massive corruption each decade. The big ones often hit during recessions or periods of other economic problems,as expected. The high-risk firms
3、are the most vulnerable to economic shocks. The recent scandals are no exceptions. The most important scandals are the focus of this paper. Although the problems that exist are diverse, a few common characteristics stand out. The first is the obvious backdrop of corporate greed. Presumably, senior e
4、xecutives expect to get away it. They also fit the financial-corporate culture described above. And earnings manipulation is part of (and usually central to) most of the scandals.Some of them used brazen and unsophisticated approaches (such as WorldCom), while others used new, sophisticated devices
5、to defraud (hke Enron). Determining the existence of criminal acts takes years. Two industries were particularly prominent in the scandals: the energy companies and telecommunications. Deregulation allowed the stodgy energy companies that carried out such basic operations as transmitting natural gas
6、 to become high-tech energy traders using sophisticated derivatives and structured-finance deals. The result was giant profits for the lenders. Continued big profits meant increasing risks and more complex deals. For Enron and others it also meant hiding the losses in controversial and often fi-audu
7、lent off-balance-sheet schemes. The telecommunications industry transformed from monopolist AT&T in the 1970s to a group of dynamic and competitive high-tech giants,all trying to integrate and dominate with new telecommunications methods. Overcapacity led to shady capacity-trading schemes booked as
8、revenues and, despite the deceptive accounting, big losses and bankruptcies. The various investment bank scandals are included because their deceptive practices encouraged earnings management and an environment of fraud. The recent mortgage-related scandals directly involve investment banks. Investm
9、ent banking deals, especially those that were complicated and skirted the regulations, were very profitable. The banks would seemingly do any deal and locate it anywhere in the world for the right price. Rather than emphasizing financial and economic reality, analysts and brokers were encouraged to
10、push stocks of companies doing investment-banking business with the parent company, irrespective of the underlying performance potential. Enron and WorldCom were the largest scandals in America history in terms of the size of the companies (based on market capalization). Both represent fraud on a la
11、rge scale, although entire different from one to the other. Enron used sophisticated fraud base on complex financial instruments, while WorldCom used an unsophiicated scheme of capitalizing operating expenses for several billion dollars. Many of the other corporate scandals around 2002 also involve
12、relatively large companies. The shock of Enron led to congression hearings and, after the fall of WorldCom some six months later, refinancial reform with the passage of the Sarbanes-Oxley Act of 2002. Enron Enron Deciared bankruptcy on December 2, 2001 after restating earnings in the 3rd-quarter10-Q
13、, indicating major problems with special-purpose entities, investigations by the SEC, Justice Department, and others； executives indicted and ciass-action iawsuits filed. Enron is the premier scandal, a new economy energy-trading company that seemed to succeed at everything it attempted. At its heig
14、ht, whichoccurred on August 23, 2000, Enron had a stock price over $90, which gave it a market value of almost $70 billion. Revenues for 2000 were over $100 billion, making it the seventh-largest American corporation(based on revenues)； stated assets were $65.5 billion； earnings were $1.3billion (if
15、 a $287 million vmte-off is ignored). Stock returns for Enron were large, 89 percent just for the year 2000 and 700 percent for the decade. This performance resulted in huge compensation payments to Enron chairman Kenneth Lay (a base salary of $1.3 million, $7 million bonus, plus 782,000 stock optio
16、ns for the year； Lay also exercised 2.3 million options, for a gain of $123 million). Manipulation was paying off . The stock would trade for less than $1 later in 2001, the debt would be rated junk and the company declared bankruptcy December 2,2001. Despite the total collapse, many of the executiv
17、es would cash out their options and be paid additional millions, while thousands of Enron employees were fired and lost all of their retirement funds invested in Enron. In terms of scandal, Enron had it all: gigantic executive compensation incentive packages； management dedicated to meeting all quar
18、terly earnings forecasts to maintain the compensation-often by accounting manipulation； a rubber-stamping board of directors； a chief financial officer (CFO) enriching himself through related-party partnerships and hidden side agreements； an accommodating auditor in Arthur Andersen, and an equally a
19、ccommodating law firm in Vinson and Elkins； investment bankers who would structure virtually any financial deal anywhere in the world for big fees, and whose financial analysts always seemed to rate Enron a strong buy, no matter the economic reality； and a political system that often stacked the dec
20、k in favor of Enron,thanks in part to large campaign contributions and massive Iobbying. People who raised doubts, both inside and outside the company, were often fired. Otherwise, there seemed to be a complete lack of ethical standards by almost everyone involved. Enron can be considered a microcos
21、m of the entire scandal environment.There have been more books and articles written about Enron than any other scandal, many written by insiders and journalists following Enron for years. Power Failure: The Inside Story of the Collapse of Enron(2003) is coauthored by whistleblower hero Sherron Watki
22、ns (with journalist Mimi Swartz), an Enron vice president who attempted to convince CEO Kenneth Lay of the seriousness of the accounting manipulations.Kurt Eichenwalds Conspiracy of Fools (2005) is the last of the significant books and probably the best in detailing the Enron story. Other books incl
23、ude The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron (2003) by Bethany McLean and Peter Elkind； Anatomy of Greed:TheUnshredded Truth Erom an Enron Insider (2002) by Brian Craver； and Enron: The Rise and Eall (2003) by Loren Fox. Enron: What Happened and What We Can LeamEr
24、om It, by Bentson and Hartgraves (2002) was a serous academic attempt to put the Enron scandal into perspective for the future of financial accounting and auditing. Manipulations and Fraud Enron acquired other companies to move into electric utilities,finance, risk management, and, toward the end, a
25、 telecommunications company. Why is not easily explained； Enron had not any experience in any of these areas. Based on economic reality, most of these new enterprises were not successful. Enron expanded into Enron Development to build power plants around the world and into Enron Broadband,timing the
26、 entrance into telecommunications just before the collapse of that industry. Some projects were marginally profitable, other disasters, but the same SPE manipulations were used to set up complex deals so Enron could hide the losses and book nonexistent profits instead. Trading profits increased with
27、 volatility and opportunities expanded when California deregulated energy. Enron used everytrading trick to overcharge California buyers； giant electric utilities California Edison and Pacific Gas and Electric declared bankruptcy in 2001. Enron traders developed specific strategies such as Fat Boy,
28、Death Star, Get Shorty, and Ricochet specifically to disrupt California power and increase electricity prices. These trading practices were improper and some (based on later litigation) proved to be illegal. Subprime Mortgage Loan Scandal The subprime loan area is related to the housing crisis of 20
29、07, associated with huge drops in demand and price in key housing markets.Subprime loans are made to low-credit borrowers at higher interest rates, often with little or no down payment. When housing prices drop,the mortgagees soon have negative equity and are likely to just walk away from the house.
30、 The mortgage holder is stuck with the loan and the property. The mortgages are packaged as structured debt (often called collateralized debt obligations or CDOs) and sold through special purpose entities (made infamous from the Enron scandal). The losses on these CDOs are the primary cause of the l
31、arge bank write-offs. These losses are continuing, getting larger, and dragging down stock prices especially for financials. As of mid-2008, financial write-downs of mortgage-backed securities are expected to total over $200 billion. As of April 2008, UBS had the dubious lead, with write-downs of $3
32、8.3 billion, followed by Merrill Lynch at $25.1 billion, Citigroup at $21.7 billion, AIG at $17.2 billion, and Morgan Stanley, $13.1 billion. Many other banks also had multi-billion-dollar write-offs. Bank managers and others were arrested and charged with securities fraud in June 2008 and the FBI a
33、nnounced that some 300 real estate executives were charged with mortgage fraud (Hays, 2008). The subprime loan scandal is primarily an investment banking scandal rather than an accounting scandal. The subprime loan scandal seems a special case of a unique bubble, exacerbated by low interest rates an
34、d new structured financing instruments where controls were not well developed. The evidence of fraud suggests that it occurred mainly at relatively low levels associated primarily with mortgage origination. The major problem is that the large banks and other institutional players badly misjudged the risks involved and actually increased risky behavior as an obvious housing bubble developed. At the corporate level, this suggests incompetence rather than fraudulent intent. Political Pressure As an S&P 500 company willing to bully anyone, Enron applied pressure to the
