According to Stephan and Star, the agency problem at Enron and other companies often is created because the CEO also serves as chairman of the company's board of directors. "When the chairman is the CEO, then the nature of information that goes to the board is often distorted," says Star. "Making matters worse, the CEO typically stacks the board with cronies and supporters. "As a result, the oversight role of the board is very easily co-opted into a rubber stamp role," he adds. "That was the case at Enron." According to Stephan and Star, the Enron case should prompt a lot of re-thinking about the role of the board of directors and whether it's better or worse for a board to own shares of a company. "The general feeling has been that board members should own shares if they are to represent the shareholders," says Stephan. "But what we're learning from Enron is that when board members own shares, there's a disincentive to ask the really tough questions for fear that those questions will drive down the stock prices." Adds Star, "The scary thing about Enron isn't Enron. It's that Enron may be just the tip of the iceberg. There are lots of companies who have boards that are closing their eyes to some pretty shady practices