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Whistle-blowing and Enron:
An Annotated Bibliography
Heather Hails
Academic affiliation: Oklahoma State University
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Baynes, Leonard M. “Just Pucker and blow: An analysis of corporate whistleblowers, the duty of care, the duty of loyalty, and the Sarbanes-Oxley Act.” St. John’s Law Review 76.4 (2002). Pro Quest. Oklahoma State University Library. 28 Sept. 2003 http://www.proquest.umi.com/pqdweb. An employee who wants to blow the whistle and reveal a company’s wrongdoing has the Sarbanes-Oxley Act to somewhat protect them, though it does not take into account the ways corporations have to get around it, along with the executive’s duties of care and loyalty to the company. Sherron Watkins, the person who blew the whistle on Enron, is considered an example of an effective whistle-blower. Whistle- blowing also greatly affects the executives of a company who are given information from an employee. Executives have to deal with their duty of loyalty to the corporation and their duty of care to perform their job and know when to report wrongdoing. The Sarbanes-Oxley Act prohibits discrimination against employees who reveal information of wrong conduct. However, it has many loopholes that need to be fixed in order to give more complete protection. This article has important information for those considering blowing the whistle at their company.

Berenbeim, Ronald. “Improper Corporate Behavior: Enron’s Syllabus of Errors.” Vital Speeches of the Day 68.10 (2002): 305-308. Enron executives, accountants, and lawyers compromised many aspects of business ethics. Berenbiem shows Enron’s violations and compromises in ten parts of business ethics that he discusses in the course he teaches over that subject. The ten “classes” he focuses on are market failures, truth and disclosure, side deals and payoffs, whistle- blowing, managers and directors, social responsibility, moral standards across borders, control by law, duties in primary markets, and insider trading. He chooses not to discuss the final three topics of right to privacy, patterns of discrimination, and termination and downsizing because they are already publicly discussed. Berenbeim takes an interesting approach to Enron by presenting it as a class syllabus. It is very helpful because it highlights where Enron went wrong in several different areas.

Cruver, Brian. Anatomy of Greed: The Unshredded Truth from an Enron Insider. New York: Carroll and Graff Publishers, 2002. In chapter eight of his book, Cruver tells his story of the way he and other employees were treated during and after the time of Enron’s bankruptcy. The mood is strangely calm as thousands of employees are told they have thirty minutes to evacuate the building. They later find out that their 401(k) retirement plans have been canceled and their severance pay is $4500 each, no matter how many years they have worked at Enron. Employees are outraged by the 55 million in retention bonuses given to five hundred “critical” employees before bankruptcy. He describes the angry and frustrated feelings he has towards Enron executives, and the struggle of beginning a new job search in a poor job market. This book gives a very clear look into the bewilderment that employees faced after the collapse of Enron.

Farhi, Paul. “A Whistle That Can Pierce the Glass Ceiling.” Washington Post 6 July 2002: C1+. Oklahoma State University Microfilms. Women are more likely to blow the whistle in big corporations because they are not as concerned with the hierarchy of business as men are. The most famous cases of whistle-blowing have been done by women. Some tests have proven that women’s societal and psychological needs make them less susceptible to engaging in or covering up corporate wrongdoing. As far back as ancient Greece, women have been blowing the whistle. He calls women “insiders with outsider values,” which is a very unfair generalization. This article is very sexist and not open-minded to both sides of the argument. He basically blames women for revealing the corporate misdeeds that have caused corporations such as Enron to fall.

Fox, Lauren. Enron: The Rise and Fall. Hoboken: John Wiley and Sons, 2003. In chapter eleven, this book discusses the reactions of employees to being laid off. Employees are angered by the extremely low severance pay that they were given which fell far below their expectations. They also miss the people they worked with and the atmosphere they worked in at Enron. The most staggering down side is the loss of their 401(k) plans, which collapsed with Enron’s stock. “Its like psychologically and financially we’ve been assaulted.” It also shows how the five hundred retained employees are treated during CEO Ken Lay’s reorganization in the treacherous months that follow, along with the many scandals that continued to plague Enron following its bankruptcy. This book is very useful because it shows the different cases that people have brought against Enron in response to the 401(k)’s and all the other problems Enron employees have faced and are still facing.

Millon, David. “Worker Ownership Through 401(k) Retirement Plans: Enron’s Cautionary Tale.” St. John’s Law Review 76.4 (2002): 835-853. Worker’s can basically gain ownership of their corporations through the way 401(k) plans are currently set, which is not a good system as Enron proved. Workers gain a right to vote their shares of company stock, but at huge corporations like Enron, this is not enough to make any significant difference, even if all employees voted the same way. There are many arguments presented in this article for using the current pension plan system, however; Enron’s collapse shows that these arguments should not be upheld. Congress is currently considering a “mandatory diversification” which would keep employees from over- investing their pension plans through buying stocks. This article is very useful in explaining the organization of pension plans, and clearly illustrates how Enron exemplifies the gaps in the system.

Near, Janet P., and Marcia P. Miceli. “Effective Whistle-Blowing.” The Academy of Management Review 20.3 (1995): 679-708. There are individual and situational variables that affect the outcome of whistle- blowing. These variables also provide a model, which shows predictors of whistle-blowing that result in wrongdoing being stopped. This model also provides a place for propositions to be drawn about how to make whistle-blowing more effective from the research it produces. Whistle-blowing is considered effective when change is implemented in a company to fix the problem that was revealed. Since, this does not frequently occur, research should be conducted to find conditions that would be more conducive ot successful whistle-blowing. This article has good research and a very extensive bibliography. It provides an excellent definition of effective whistle-blowing, and makes an important point that whistle-blowing is not something that should be done without consideration of the adverse effects it may have.

Near, Janet P., Terry Morehead Dworkin, and Marcia P. Miceli. “Explaining the Whistle-Blowing Process: Suggestions from Power Theory and Justice Theory.” Organization Science 4.3 (1993): 393-411. Legal procedures do not seem to be as effective in encouraging positive results for the whistle-blower and its corporation as legalistic responses designed by the organization itself. The theories of power relations and justice provide a framework for explaining whistle-blowing and produce information useful for policy suggestions to encourage companies to respond positively to whistle-blowers. Legalistic responses are set up by companies to provide policies and procedures to encourage whistle-blowing within their own corporations without influence from outside laws. The power relations theory deals with the process of the whistle- blower and the company trying to exert power over each other in order to resolve the issue. The justice theory relies on procedural justice that predicts how satisfied whistle-blowers are with the procedures taken to deal with the problem and distributive justice which produces that satisfaction. These are excellent theoretical foundations that allow for policies to be formed which will encourage whistle-blowing.

Sims, Ronald R., and Johannes Brinkmann. “Enron Ethics (or: Culture Matters More Than Codes).” Journal of Business Ethics 45.3 (2003): 243-256. The culture that Enron executives created is what set up Enron’s unethical way of doing business. Enron is a pipeline company that became a very large and powerful corporation; however, its top executives frequently compromised ethics to make money, which ended up causing Enron to go bankrupt. In order to see where the executives went wrong and how the new CEO, Stephen Cooper can restructure the company, Schein’s five primary mechanisms to developing culture need to be implemented. These are attention focusing, reaction to crises, role modeling, rewards allocation, and criteria for hiring and firing. This article gives very good advice on how Cooper can restructure the company. It also focuses on how the employees are affected by the poor choices of the leaders, which is very important to the ethical health of a corporation.

Watkins, Sherron. “Pristine Ethics: Who Do You Trust?” Vital Speeches of the Day 69.14 (2003): 435-439. Enron is the epitome of the abuse of power at the corporate level. Sherron Watkins tells her story of how she discovered Enron’s wrongdoings and exposed them. She then discusses how her life has been affected and why she considers herself to have failed in her whistle-blowing efforts. Watkins also discusses how Enron has affected the public, along with the way its executives caused the problems. She concludes that in order for the business world to move forward, trust needs to be reestablished in executives. Her personal story is very informative about the background surrounding Enron, and how it has affected her and the public.

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