Accounting fraud, business failure and creative auditing: A microanalysis of the strange case of the Sunbeam Corporation

This article closely examines the Sunbeam Corporation's path to failure and explores the reasons for its singularity. From the analysis of US fraud cases included in the UCLA-LoPucki Bankruptcy Research Database, this corporate case appears as an outlier. For Sunbeam, the time-lapse between fraud disclosure and its final bankruptcy is the longest of the entire sample; it is unique because of its length. This article uses a historical microanalysis to evaluate different hypotheses about the Sunbeam Corporation's path to failure. The relationships between acquisitions and fraud, scapegoat dynamics' and creative auditing' are identified as the most relevant issues to be examined against a changing institutional context. The resulting reconstruction of the events provides unexpected insights and recommendations for future research on auditing and accounting fraud.