The fall of Enron and subsequent large corporate scandals provoked a relatively quick response from policy makers all over the world. This response was represented by documents such as the Sarbanes-Oxley Corporate Reform Act (USA), the Higgs and Smith Reports (UK), and the OECD’s Principles of Corporate Governance. The scandals also initiated broad debate over how to revise corporate governance standards. While some authors see flaws in the current prevalence of the shareholder model and support a broader application of the stakeholder model, others argue that the shareholder perspective is more important than ever before.
Despite the different views, there seems to be a consensus on several issues. Enron’s case highlighted the importance of properly inducting, training and developing board members, and also the importance of allowing institutional investors to find and nominate replacements for ineffective directors. Company-sponsored research on governance has the potential to create benchmarks for good practice, and publishing a code of ethics could be the first of such good practices.