In the fall of 2001, the stock price of Enron, Americas seventh largestcorporation, collapsed amid reports of deepening accounting irregularities,fictitious profits, shredded audit documents, and the suspicioussuicide of a key executive. Enron struggled to avoid bankruptcy butfailed. Arthur Andersen, Enrons Big Five auditor, failed as well. Enronand its most important trading partners, Dynergy, Reliant, and CMS Energy,were found to have engaged in sham accounting, including thebooking of round-trip swaps to inflate revenues and earnings by asmuch as $4 billion. Congressional hearings were held after the stocks ofGlobal Crossing and WorldCom plummeted as accounting irregularitieswere discovered. The widening scandal underscored an uncomfortablechange in U.S. capitalism: deft manipulation of stock prices and accountingfigures have displaced the efficient management of industrialproduction as the central concern of U.S. corporate executives.
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