Thesis (MBA)--Stellenbosch University, 2004. / The Study Project is entitled: "Corporate Governance and the fall of Enron", Concepts like corporate government have been developed and created due to needs of owners and society to supervise management but more importantly influence the direction of companies. The term "corporate governance" derives from an analogy between the governments of cities, nations or states and the governance of corporations. The early corporate finance textbooks saw "representative government" (Mead 1922:31) as an important advantage of the corporation over partnerships but there has been and still is little agreement on how representative corporate governance really is, or whom it should represent. The analogy between corporate and political voting was explicit in early corporate charters and writings, dating back to the revolutionary origins of the American corporation and the first railway corporations in Germany (Dunlavy 1998). The precise term "corporate governance" itself seems to have been used first by Richard Eells (1960, p.l08), to denote "the structure and functioning of the corporate polity". An important objective of this Study Project was to investigate the case study of Enron, why it failed and the outcome relating to Corporate Governance in the future. A review of the activities by Enron was done in order to determine the possible reasons of its failure. To achieve the above, it was determined that qualitative, investigative research would be conducted, rather than a quantitative, numerative approach. The research methodology used in this Study Project of a secondary research. Secondary research, in the form of an in-depth, global literature review was conducted on the topic.

The phenomenon of business failure has attracted research interest in finance literature partly because of its impact on the U.S economy. Whereas an impressive body of knowledge has been accumulated on this subject thus far, the hospitality literature has lacked empirical studies that seek to explain the nature of this phenomenon in the hospitality industry. The restaurant industry has consistently had the most business failures of any single segment within the retail trade sector in the eighties. Therefore, there were three purposes in this study: 1) to develop a model for predicting business failure which can be a useful tool in helping researchers and industry practitioners to identify warning signs of business failure in the restaurant industry, 2) to determine whether the financial variables of a predictive model for business failure in the restaurant industry are the same as in the hotel industry, and 3) to determine whether the financial variables that are associated with reorganization are different from those that are associated with liquidation in the restaurant industry. The sample consisted of 23 failed and 23 non-failed restaurant firms, and 15 failed and 15 non-failed hotel firms within the period of 1982-1993. The predictive business failure models were developed through logistic regression analysis employing 8 financial variables based on one year prior to business failure. The models were tested at two and three years prior to business failure. The empirical evidence illustrated that the business failure model developed for the restaurant industry is capable of predicting business failure, and even bankruptcy with high classification accuracy. The relationship between reorganization and liquidation was investigated through logistic regression analysis employing two sets of indicators for capital structure and profitability. The sample consisted of 14 reorganizers and 10 liquidators from the restaurant industry. The empirical evidence showed that reorganization and liquidation are not dependent on each other, that is, reorganization and liquidation cannot be determined by both Capital structure and profitability in the restaurant a failed [end of author-provided abstract]. / Ph. D.

The collapse of Enron and its aftermath has put unprecedented focus on the accounting profession and its role in the self-regulatory system.