Citation
The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron
TL;DR
Documented systematic mark-to-market accounting fraud
Definitive account of Enron's rise and collapse, documenting mark-to-market accounting abuses, off-balance-sheet SPE fraud, and the extinction vortex from credit downgrade to bankruptcy in months. Essential case study of organizational extinction from overspecialization and fraud.
The book illustrates how apparent competitive fitness can be entirely illusory when based on fraudulent foundations. Enron's 'adaptation' to its environment was fake - once the fraud was exposed, the organism died instantly because it had never been viable in the first place.
Key Findings from McLean & Elkind (2003)
- Documented systematic mark-to-market accounting fraud
- Revealed off-balance-sheet SPE structures hiding billions in debt
- Traced extinction vortex from disclosure to bankruptcy in weeks
- Showed how regulatory environment shift triggered collapse