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Professors Draw on Enron for Lesson

March 15, 2002

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NEWARK, N.J. (AP) _ According to the syllabus, the Thursday morning class in Conklin Hall was supposed to focus on Chapter 4, ``Ethics in the Marketplace.″

Instead, the students spent the time considering material that hasn’t yet made it into the textbooks _ the collapse of Enron.

``Ethics in the marketplace is clearly going to be a very relevant chapter for the Enron story,″ professor Robinson Lilienthal told the undergraduates in his business ethics class at Rutgers University’s Newark campus.

Professors and students in business schools around the country have seized on the tale of the energy giant’s collapse as a compelling, real-life lesson, useful for examining everything from accounting standards to ethics.

``One reason we’re using Enron so much is it’s one of the few times you can throw out an actual case that everyone here knows about,″ said Janice Lawrence, an accounting professor at the University of Nebraska in Lincoln. ``Every day something new is happening and it lends a certain air of excitement to discuss it.″

Enron is the latest in a long line of corporate controversies that have become case studies, including the Equity Funding scandal of the early 1970s, the Exxon Valdez oil spill in the late 1980s and, more recently, the antitrust case against Microsoft.

But the speed and scope with which Enron has inserted itself into the classroom are unusual, professors say. The reason, many say, is that Enron is a vortex for so many of the most compelling and complex issues in business _ corporate governance, executive compensation, the roles of auditors, accountants and analysts, financial disclosure, the responsibility of a company to its employees, political contributions by business.

``The thing about the Enron case is that it is so multifaceted,″ said Bruce Buchanan, a professor of business ethics at New York University’s Stern School of Business. ``There are aspects of it that are either uniquely gray or uniquely horrible.″

Buchanan, who co-edits a text of corporate case studies used by graduate students in a required course on business ethics, said Enron happened too late for the current edition. But the company’s meltdown is bound to be included in multiple chapters of editions for years to come.

The first chapters are ``truth and disclosure. Well, that’s where the whole thing started with Enron,″ he said. ``No. 3 is about whistle-blowing. ... No. 4 is managers and directors, fiduciary duty and responsibility _ need I say more?″

In the meantime, Buchanan and other professors have already woven the topic into their current classes.

At Nebraska, Lawrence has been clipping articles about Enron and putting them on the overhead projector in her financial accounting class of 200 students, a required course for business majors. Lawrence uses the articles to emphasize the essential role accountants play in delivering accurate information to investors, and the intricacies of judgments they must make.

At NYU, the faculty has organized special forums, including one Feb. 7 in which professors from the accounting, finance and business ethics departments, along with a former judge, discussed the case.

The University of Oregon recently played host to partners from the regional office of Arthur Andersen, who spoke to more than 40 accounting students about the controversy, taking questions and trying to allay concerns about the firm.

Faculty members have also drawn on the case to lighten up a serious topic.

``One of my marketing colleagues came by my office and asked whether, in accounting, do we teach shredding and deleting,″ said Dale Morris, a professor of accounting. ``I had to pass that on to my students.″

He said aspects of the Enron case will almost certainly be the focus of Ph.D. dissertations next year.

Studying Enron as the controversy unfolds offers a chance to learn something beyond the textbooks, students in the Rutgers class say.

``It’s valuable now because we can be objective. You can make your own judgment,″ said Malaika President, a junior majoring in finance. ``In 15 years, when it’s in a book, it’s going to be subjective.″

Another student, Danny Mendoza, said: ``Most exams are just memorization. This is more relevant. This will stick with us.″

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