Corruption, Fraud, and Corporate Governance: A Report on Enron
This chapter revisits the Enron scandal through a Weberian lens. It reminds us that the ‘spirit of capitalism' is not about avarice and greed, but precisely about the transformation of these irrational compulsions, and the rational and tempered pursuit of gain through appropriate institutions. It draws on classic sociology for defining corruption as misapplication of codes of conduct across social realms that should be regulated by different codes (the economic, political, and science realms) and fraud as the breach of trust. It highlights how under some common conditions in modern economies, such as information asymmetries and intangible assets, if the prevailing system code is strictly economic, the opportunity structure for fraud and corruption can only be increased.
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