Enron: A Lesson In Corporate Governance

Auditors weren’t the only gatekeepers failing in their professional duties. Analysts delegated with the responsibility of providing investors with an objective and unbiased opinion about a company’s current and future prospects were unsuccessful too in carrying out their responsibilities. Most analysts were associated with and worked for investment banks most of whom had banking relationships with the very companies, who the analysts were meant to be evaluating. The conflict of interest couldn’t have been
more apparent. If the analysts gave a “sell” recommendation on a particular company’s stock, the bank risked antagonizing the client and consequently losing its business. On the other hand, a “buy” recommendation meant more business.