Colin Boyd, in "The Structural Origins of Conflicts of Interest

question 6

Essay

Colin Boyd, in "The Structural Origins of Conflicts of Interest in the Accounting Profession", details the events that led to the collapse of Enron and scandals at other companies. Do you believe that corporate capital punishment was a just outcome for Arthur Andersen and its many employees and partners. Why, or why not. Appeal to moral theories that have been discussed in class and in this chapter in defending your position.

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Definitions:

Unlevered Return

A return on investment that doesn't account for debt, measuring the performance of an investment as if no borrowing took place.

Cost of Equity

The return a firm theoretically pays to its equity investors to compensate them for the risk they undertake by investing in the company.

Total Debt

The sum of all short-term and long-term liabilities owed by an entity.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set.