Professor James Seida teaches accounting at the University of Notre Dame and testified before Congress in February of 2003 about a $5.8 billion discrepancy between Enron's reported and
actual earnings. We asked him about Kenneth Lay and Jeffrey Skilling's convictions last week.
Q: Will this conviction serve as a deterrent to future corporate leaders?
A: Sure. The penalties are fairly stiff. Anytime you wave jail time at someone it's
Q: How will you and other professors present this case to students in the future?
A: From an instructional standpoint, you would say that there may not have been as much reliance placed upon traditional financial measures. During that time, the Internet was booming, there was a lot of talk about using alternative methods to value firms -- number of hits to Web sites, for example, instead of financial information.
This case highlights the importance of accounting information. Not saying the accountants were completely innocent, but if one were to analyze the accounting statements of Enron, it becomes clear that there might have been a problem.