Final answer:
The Enron scandal had negative effects like loss of trust and financial losses, but also led to positive financial reforms such as the Sarbanes-Oxley Act to improve transparency and ethical standards in corporate governance.
Step-by-step explanation:
The Enron scandal negatively affected the financial system by highlighting significant issues in accounting practices and corporate governance. It led to a loss of public trust, substantial financial losses for investors, the closure of Arthur Andersen, a major accounting firm, and the overhaul of regulatory standards. However, it also had a positive impact by acting as a catalyst for significant reforms, like the Sarbanes-Oxley Act, which increased transparency in financial reporting and established new legal penalties for corporate malfeasance. The rigorous regulations enforced after the scandal are designed to prevent such occurrences in the future, improving the stability and integrity of the financial markets.