Business Ethics: From Enron to Lehman Brothers

Note: The Live Virtual course is presented in collaboration with CPABC. The content is applicable to all participants. If you have questions regarding this course, please contact pdregistration@cpaalberta.ca.

Overview:

The collapse of Enron Corporation and Lehman Brothers are iconic case studies which are still mentioned in the field of business ethics. However, discussions of these case studies are often superficial with respect to the complex ethical, financial, and accounting issues involved. They also often focus on legal and regulatory issues involved rather than those of moral psychology and culture. This course will provide a more advanced analysis of these cases from the perspective of moral psychology and culture, with the objective of understanding how lessons learned may be applied to our current business environment. This will benefit anyone seeking an understanding of ethical behavior within large corporations or firms, or who have an interest in the case studies presented.

The course will explore personal and cultural factors which influence ethical behavior through the lens of two iconic business ethics case studies: the 2001 collapse of Enron Corporation and the 2008 bankruptcy of Lehman Brothers. In comparing the two cases, research from moral psychology and the role accountants played will be discussed. We will also have the opportunity to reflect upon what lessons may be learned from these cases and how they might be applied in our current business environment.

Course Content:

In this course, you will gain knowledge about the following topics:

• The Collapse of Enron
  • Deregulation of the natural gas industry
  • The role of McKinsey & Company and creation of the “Gas Bank”
  • Expansion into other commodities
  • Accounting use of commodity derivatives and “special purpose entities”
  • Financial bankruptcy
• The collapse of Lehman Brothers
  • Role of US Government and the Federal Reserve
  • Creation of credit derivatives 
  • Accounting use of “Repo 105” and “special purpose entities”
  • Financial bankruptcy
• Personal moral failure
  • Moral decision-making process 
  • Exercise: Identification of moral situation from “Margin Call”
• Corporate culture/moral psychology
  • Milgram experiment
  • Asch lines
  • Kohlberg Theory of Moral Development
  • Routinized behavior and pressure to perform
  • Time pressure – Princeton Theological Seminary
  • Role of fear
  • Compliance programs
• Synergistic corruption
  • What is synergistic corruption and the role it played at Enron/Lehman
• Conclusion
  • Exercise: what should we/I do?

Learning Objectives:

By the end of this course, you should be able to:

• Explain what contributed to the rise and fall of Enron Corporation and Lehman Brothers, including the consequences on society and the role accountants played
• Explain the similarities and differences between the rise and fall of Enron Corporation and Lehman Brothers
• Explain the psychological process for individual moral decision making
• Explain some of the cultural factors which influence individual moral decisions
• Consider how these psychological and cultural factors may influence their own ethical behavior

Who Will Benefit: 

 Of general interest but specifically applicable finance and accounting professionals who work in large organizations.