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The Real Lesson of Enron's Implosion: Market Makers Are In the Trust Business

McAfee, R. Preston (2004) The Real Lesson of Enron's Implosion: Market Makers Are In the Trust Business. Economists' Voice, 1 (2). ISSN 1553-3832. doi:10.2202/1553-3832.1008. https://resolver.caltech.edu/CaltechAUTHORS:20180802-145422339

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Abstract

How did Enron, a firm worth $60 billion, collapse over the discovery of a billion or so in hidden debt and fraudulent accounting? It didn't. Or, at least, not directly. Market makers like Enron and Ebay are in the "trust" business, just as banks and insurance companies are. Once trust was lost, the rest of Enron's value quickly disappeared. The maintenance of customer trust is an important, and frequently mismanaged, aspect of business strategy. The legislative response of Sarbanes-Oxley may do some good, but cannot really ensure trust.


Item Type:Article
Related URLs:
URLURL TypeDescription
https://doi.org/10.2202/1553-3832.1008DOIArticle
Subject Keywords:Enron; signaling; trust; bank run; expectations; eBay
Issue or Number:2
DOI:10.2202/1553-3832.1008
Record Number:CaltechAUTHORS:20180802-145422339
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20180802-145422339
Official Citation:McAfee, R. (2004). The Real Lesson of Enron's Implosion: Market Makers Are In the Trust Business. The Economists' Voice, 1(2), pp. -. Retrieved 2 Aug. 2018, from doi:10.2202/1553-3832.1008
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:88536
Collection:CaltechAUTHORS
Deposited By: Tony Diaz
Deposited On:02 Aug 2018 22:00
Last Modified:16 Nov 2021 00:27

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