THE ROLE OF FINANCIAL MARKETS IN THE CASE OF ENRON

Abstract

The subject of this article is the case of Enron and its interrelations with the financial markets. The purpose of this article is to produce a review of scientific research, conducted on the Enron case, and with its help to analyse the case from the distance of almost two decades. This article provides an analysis on the role financial instruments played in the downfall of Enron, the broader market effects resulting from the rise and fall of Enron and recommendations of risk mitigation techniques that could have been applied to minimize Enron’s risk profile. The work is exploratory in nature and is based on an extensive review of earlier relevant studies on the various aspects of the Enron case and its interrelation with financial markets. The conducted analysis of the recent research publications has shown that financial instruments and the lack of legislation and accounting standards, regulating the involved transactions, played a crucial role in Enron’s downfall.