24 Days

Smith and Emshwiller, the Wall Street Journal reporters whose articles in October and November 2001 precipitated Enron's collapse, wrote a first-person account of the investigation.

The narrative starts with a tip about Enron's related-party partnerships and follows the reporting: obtaining the limited partnership documents, establishing that the chief financial officer Andrew Fastow was running entities on the other side of transactions with his employer, publishing the questions, and watching the company's response escalate from dismissal to the disclosure of a reduction in shareholders' equity that had not previously been explained. The twenty-four days of the title run from their first article to the company's collapse.

The substance concerns the mechanism. Enron used special purpose entities to move assets and debt off its balance sheet and to book gains on transactions with entities it effectively controlled. The accounting treatment required outside equity of at least three per cent in each entity, and the reporters established that this equity was often supplied by parties connected to Enron or backed by Enron's own stock, which meant the entities were not independent and the treatment was not valid. When the share price fell, the guarantees came back onto the company.

The book also documents the responses they received: from Enron's executives, from analysts who continued to recommend the stock, and from the accounting firm.

It is a reporters' account rather than a full corporate history, and it is limited to the period of their investigation. Bethany McLean and Peter Elkind's The Smartest Guys in the Room is the more complete book. Its distinctive value is showing how far a company can go while its disclosures are technically available, and how much effort was required to establish what the filings actually said.