Analysis of the corporate governance crisis that manifested itself in the United States at the turn of the millennium requires separating its various strands. The Enron Corporation ("Enron") debacle and the dot corn bubble and collapse, for example, share some common elements but in other ways they are quite different. In both cases investors became aggressively enamored of an unsustainable business model. In the dot com case it was the belief that an innovator in a rapidly growing market could attain powerful first mover advantages that would produce an eventual cascade of profits, so that a current and increasing stream of losses was not necessarily a valuation negative. In the case of Enron it was the belief that a firm could create and exploit unique trading opportunities in markets that it would then dominate.
Business Organizations Law | Law | Securities Law
Jeffrey N. Gordon,
Governance Failures of the Enron Board and the New Information Order of Sarbanes-Oxley,
Conn. L. Rev.
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/3456