Source: Diane Swanson, 785-532-4352, swanson@k-state.edu
http://www.mediarelations.ksu.edu/WEB/News/MediaGuide/dswansonbio.html
News release prepared by: Keener A. Tippin II, 785-532-6415

Thursday, February 2, 2006

K-STATE PROFESSOR SAYS ENRON TRIAL SHOULD CALL PUBLIC ATTENTION TO EXECUTIVE SALARIES AND PERKS

MANHATTAN -- A Kansas State University professor says the trial of former Enron Corp. executives Kenneth Lay and Jeffrey Skilling should call public attention to the salaries and perks offered to top executives and the recent cases of corporate misconduct.

Lay, Enron's founder, is currently on trial for seven counts of fraud and conspiracy for allegedly lying to investors and Enron employees about the company's financial health before the one-time energy giant flamed out in 2001. Skilling, former Enron chief executive officer, faces 31 counts of fraud, conspiracy and insider trading.

"There is a danger that the public will forget about the damage wrought by the most recent wave of corporate scandals, one of the worst in the history of financial capitalism," said Diane Swanson, a K-State associate professor of management and von Waaden business administration professor.

"This is a shame because these scandals have cost society untold misery in lost jobs and pain in local communities, particularly in Houston," Swanson said. "Thousands of people lost the value of their Enron pension funds, which is no small matter."

The Enron collapse was part of a series of recent corporate scandals. In the last few years, the government has won convictions against executives from major companies such as WorldCom Inc. and Adelphia Communications Corp.

Swanson attributes part of the recent sweep of corporate scandals to inadequacies in business school curriculums nationwide. In an effort to help prevent corporate ethics scandals like the Enron case from recurring in the future, Swanson has been spearheading a campaign to emphasize the importance of ethics in business education. The campaign has earned the endorsement of more than 200 professors, ethicists and business professionals and two conference boards.

"Many corporations have forsaken a responsibility to serve the greater good of society in favor of greed," Swanson said. "As a result of Enron and other corporate scandals, the general public has become more cynical about business leaders and the role of business in society."

In a response to the cases of corporate wrongdoing, the Securities and Exchange Commission recently approved a proposal that would force companies to disclose a single figure for their executives' total pay. Swanson applauds the action, saying some research indicates there has been a trend toward ever-increasing salary differentials in organizations for a number of years. She believes the SEC action sends a clear message that executive responsibility to community matters.

Appropriate regulatory oversight, ethical leadership among top managers and vigilance from the press, as well as other actions, are needed to help prevent future corporate scandals, according to Swanson.

"The press needs to continue to shine the light of day on corporate scandals, including the facts of Lay's trial, so that the public is assured that these issues are not taken lightly under the law," she said.

Swanson also thinks that business school deans should be invited to testify in front of a select Senate committee on what they are doing to ensure today's business students are exposed to the principles and practices of corporate social responsibilities, especially the ethical responsibilities of top executive managers.

"Otherwise, Enron and the Lay trial will fade from memory and graduate students in business schools may get the message that greed and self-aggrandizement are more important than executives' stewardship of society's scarce resources," Swanson said.