Enron’s 2001 accounting scandal deepened the market decline after the dot-com crash. Enron, once one of the United States’ most admired companies, disclosed major accounting problems and filed for bankruptcy in December 2001.
The company had used complex partnerships and accounting practices to hide debt and inflate reported performance. As the truth emerged, investors lost confidence not only in Enron but also in corporate reporting, auditors, and financial markets. Arthur Andersen, Enron’s auditor, was convicted of obstruction of justice in 2002, although that conviction was later overturned.
Enron’s collapse occurred during the broader 2000–2002 bear market, but it was not the cause of the technology bubble’s formation or its initial burst. The scandal helped produce the Sarbanes–Oxley Act of 2002, which strengthened corporate reporting and executive certification requirements in the United States.