Boardrooms of Energy Firms in the Post-Enron Era

Abstract

Corporate governance has emerged as a topic of significant importance, particularly in the aftermath of the Enron scandal. Undoubtedly, the renewed scrutiny of this entity is not without justification. Enron’s failure is largely attributed to a breakdown of corporate governance with the inability, or unwillingness, of the board of directors to hold management accountable on behalf of the shareholders. Meanwhile, the academic and popular literatures have yet to provide unequivocal guidance as to the appropriate modus of operandi in the boardroom. Based on survey and interview results, this paper provides some suggested practices regarding the proper functions, optimum configurations, and appropriate incentive schemes of the boardrooms belonging to the energy industry. The importance of the energy sector stems from its prominent role as a main contributor to the production of goods and services. The guidelines presented in this study would enable the boardroom to be vigilant and adopt preventive measures not just in crisis situations, but also continually.