Enron, fair value accounting, and financial crises: a concise history

Stephen Haswell, Elaine Evans

Research output: Contribution to journalArticlepeer-review

14 Citations (Scopus)


Purpose – While the debate about fair value accounting (FVA) and the global financial crisis (GFC) of 2008-2009 has been explored in the academic and professional literature, there has been little debate about the consequences of FVA being implicated in the crash of Enron around 2001, and the effect of this on later FVA developments and the GFC. The purpose of this paper is to examine how well regulators, political actors, and other commentators may have understood the use, misuse, effects and consequences of FVA at the time of
Enron, and to examine how this collective understanding (or lack thereof) has influenced later accounting policy, especially that going into and arising from the GFC. Design/methodology/approach – Using content analysis, the commentary about FVA is traced through documents, primarily the US Congressional Hearings’ examination of the collapse of Enron that took place
between December 2001 and December 2002. An assessment of the knowledge of and attitudes toward FVA is made from these and is then traced through later developments including policy responses before, during and after the GFC.
Findings – Links are found between the collapse of Enron and adjustments to FVA in the mid-2000s, which in turn became implicated in the GFC. These linkages are explored in the context of a fair value world view held by global standards setters in the mid-2000s. During the timeline from the 1990s to the mid-2000s, those advocating and adopting FVA as part of this world view, may have had collectively an insufficient understanding of the consequences or effects of FVA technology. Originality/value – The study provides evidence of a direct link between Enron, the response of global standard setters, and the GFC controversy.
Original languageEnglish
Pages (from-to)25-50
Number of pages26
JournalAccounting, Auditing and Accountability Journal
Issue number1
Early online date2017
Publication statusPublished - 2018


  • fair value accounting
  • Enron
  • GFC
  • politics
  • standard setting


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