Document Type

Article

Publication Title

Cornell Law Review

Abstract

One can only try to understand how the catastrophes happened in the hope of avoiding them in the future. This Article looks across these six cases-WorldCom, Enron, Lincoln Savings, HIH, EIEI, and BCCI-and attempts to identify common threads that might help prevent similar disasters in the future. Each of these six events was a complex phenomenon with its own etiology, development, and resolution. Discussing any one of them in detail, much less comparing all six, is beyond the scope of this Article, which hopes only to touch upon some of the apparent common features that, upon further inquiry, might yield fruitful research and investigation. The six cases at issue share a number of features. The commonalities are surprising, even remarkable. Each of the features this Article addresses-massive growth spurts, key corporate officers with strong political connections, and domination of the firm by a single individual or small group-is potentially innocuous; indeed, many perfectly safe and well-managed firms display one or more of these features. What is remarkable is the accumulation of these common features in these six firms. There is a family resemblance among them: there may be no single feature common to all or lacking in all the others, but the combination of a group of features shared by most makes it possible to identify individuals as members of the same clan or kin. This analysis suggests that a bunching of these features in a single firm may be cause for concern.

First Page

423

Volume

89

Publication Date

2004

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