Mar/Apr 2006

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The rash of spectacular corporate scandals has already yielded a big shelf of books, many of them focused on the story of a single corporation run amok. David Skeel's Icarus in the Boardroom differs from most of the products of this genre. First, it is a very interesting and well-told history of corporate failures in the United States, and the role of those failures in evolving the legislative and regulatory environment for business in the U.S. today. In this respect, the book could not be more timely—but not because this is the white-hot issue it was at the time of the downfall of Enron and WorldCom and the passage of Sarbanes-Oxley. Rather, Skeel speaks to us at a time when business regulation is still a compelling issue—as the Enron trial makes clear—but the noise level has decreased enough for us to be more reflective in our thinking. Icarus in the Boardroom provides an excellent and easily accessible education for the reader who has not previously delved deeply into the topic.

Skeel's ambitions extend beyond the strictly historical. The second major facet of the book develops a theory explaining why large-scale business failures occur: what Skeel calls "The Icarus Effect." The Icarus Effect comes into play when a rare individual, a leader who has exceptional business skills but also is marred by a significant character flaw, flourishes unchecked in a permissive business environment, with disastrous results. Finally, Skeel outlines his ideas for further strengthening the regulation of corporations and for better securing the nest eggs of individual investors.

The historical account of corporate America is by far the greatest strength of the book. It is literate and has a strong narrative drive. It is also ...