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- Title
How to Be Good: The Emphasis on Corporate Directors' Good Faith in the Post-Enron Era.
- Authors
Rivers, Thomas
- Abstract
This article reports that the irrational exuberance of the late 1990s, marked by frenzied stock trading and risky investment strategies, fueled aggressive accounting practices that exaggerated real achievements and camouflaged setbacks. During that time, investors accepted business practices that measured performance by revenue, rather than earnings or cash, and by the number of eyeballs hitting Internet sites. U.S. Federal Reserve chairman Alan Greenspan said that when greed swept through their nation, they were not prepared to address it. The result was accounting scandals at Enron, WorldCom and other organizations, in which directors failed to ask questions of management to determine whether the stock was rising solely as a result of smoke and mirrors. In 2002, the Congress responded to these scandals with the Sarbanes-Oxley Act, which modified governance, reporting and disclosure rules for public companies.
- Subjects
UNITED States; STOCKS (Finance); INVESTORS; WEBSITES; INTERNET; PUBLIC companies; GREENSPAN, Alan, 1926-
- Publication
Vanderbilt Law Review, 2005, Vol 58, Issue 2, p631
- ISSN
0042-2533
- Publication type
Article