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municated with fundamental busi- ness cases, those whose reliability stands the test of time. Now the Internet craze is long gone, and here we are again with yet another media favorite: Enron. Enron is making financial account- ing topics sound "sexy" to the pub- lic and to business students. With Enron fueling this newfound interest in financial reporting, it might seem tempting to update my course to study Enron's example. But I did consider that choice to its shareholders? In Enron's case, we are beginning to wade through the finger-pointing and to identify what went wrong where. To help students answer the "big picture" questions, however, I'd rather use more reliable examples to help stu- dents isolate the issues and examine them thoroughly. Students might be better served carefully this time. It is true that Enron encompasses so many of the topics that we must cover in man- agement programs, which can make it an attractive case study. If we wish to talk about the relationships between managers and outsiders, the incentives managers have to mis- report information, or the quality of information being reported in the auditing process, we could use Enron as an example. Its relevance to present-day business cannot be denied. However, it may not be the clear- est example. Enron is a difficult-to- understand company in a difficult- to-understand industry. Its transac- tions are not the transactions that most students entering an MBA pro- gram are familiar with, or even likely to deal with, after graduation. And because Enron is so complex, it's difficult to use it as an example to teach core concepts. In fact, most of the financial reporting issues related to Enron are covered in my course through cases that are much more easily absorbed by students. For example, how do managers' incentives, auditors' inde- pendence, and off-balance-sheet financing affect the quality of the financial information a firm reports by learning to assess the accounting policies and financial performance of firms with simpler business models like Wal-Mart, Sears, Delta Airlines, Microsoft, and even Amazon.com. These might not be the sexiest com- panies, but using them as examples strikes a better balance between rele- vance and reliability than I think using Enron does. As an educator, I must ask two questions before introducing Enron as a major part of my course. First, if my goal is to give students a strong foundation in analyzing financial statements and knowing what to do with them, is it worth it to teach them about Enron's unde- cipherable financial statements? I don't believe it is. Because account- ing numbers can be manipulated, many students believe they are use- less. Therefore, my first job is to convince them that these numbers, in fact, communicate valuable infor- mation. With so much about its demise unknown, Enron's financial statements simply are not the best means to deliver this message. Second, is there anything signifi- fact, we see an "Enron" almost every year, although granted, not necessarily to that scale. A few years ago, for example, Cendant Corporation disclosed information about fraudulent accounting prac- tices; this year, we saw Kmart declare bankruptcy, which would have been spectacular if Enron hadn't cast its shadow over it. But before I incorporate such cases into my classes I know I must choose the best medium to make sure my message sticks. Often that means bypassing the latest news and, instead, using simple examples. I would rather my students have a thorough understanding of some important core concepts, than a superficial understanding of too many at once. I am not saying that Enron is irrelevant to teaching business. Talking about such a complex, interesting, and topical event can be a great motivator to students. I am also not saying that Enron may not make a great case study in the future. But until we know the full causes and consequences of Enron, using it to teach core principles of financial statement analysis and valu- ation may not be the best pedagogi- cal choice. In planning my course, I focus cant about Enron that my colleagues and I don't already cover in our courses? I don't think so. The only thing special about Enron is that it is like a "perfect storm"— everything that could go wrong went wrong at the same time. I have told my students that, in first on the most important con- cepts I want my students to under- stand. Then I find the examples that do the best job of showcasing those concepts. The tradeoff for me lies between relevance and reliabili- ty. Enron makes for a very relevant case but, at this time, not a very reliable one. ■ z Jan Barton is an assistant professor of accounting at Emory University's Goizueta Business School in Atlanta, Georgia. BizEd MAY/JUNE 2002 63