Agency And Stakeholder Theories To The Enron Debacle

Enron had the largest bankruptcy in America’s history and it happened in less than a year because of scandals and manipulation Enron displayed with California’s energy supply. A few years ago, Enron was the world’s 7th largest corporation, valued at 70 billion dollars. At that time, Enron’s business model was full of energy and power. Ken Lay and Jeff Skilling had raised Enron to stand on a culture of greed, lies, and fraud, coupled with an unregulated accounting system, which caused Enron to go down. Lies were being told by top management to the government, its employees and investors. There was a rise in Enron 's share price because of pyramid scheme; their strategy consisted of claiming so much money to easily get away with their tricky ways. They deceived their investors so they could keep investing their money in the company.

The story of Enron is truly remarkable. As a company it merely controlled the electricity, natural gas and communications sectors of the world. It reported (key word, reported) revenues over one hundred billion US dollars and was presented America’s Most Innovative Company by Fortune magazine for six sequential years. But, with power comes greed and Enron from its inception employed people who set their eyes upon money, prestige, power or a combination of the three. The gluttony took over sectors which the company could not operate proficiently nor successfully.

The company has displayed a poor financial performance reducing its investor's confidence. Though the company's

The Security Exchange Commission found that The Enron corporations CEO’s and executives hindered the company’s research methods by using information to reveal how the top leaders of the organization assisted and supported the unethical behaviors in the accounting and finance departments. These acts deteriorated the integrity of excellence professionals, associates, and employees who were associated with the Enron Corporation. On behalf of the entire organization, the Enron Corporation’s poor business practices gross standards that pertain to unethical behavior.

List 5 key stakeholders affected by the collapse of Enron? Explain briefly how each stakeholder was affected.

The focus of the corporation soon changed direction once it was realized that investing in selling intangible assets on the market could provide easier and higher revenue returns. This type of trading on the open stock market, with little regulations is what allowed the infamous criminal acts to take place and led to one of the world’s worst bankruptcy cases in United States history. An investigation finally occurred when investors found suspicious stock prices increasing exponentially and a whistleblower raised concern that finally revealed the fraudulent operations of Enron’s top executives conspiring with multiple businesses.

Whenever someone hears the word "Enron" today, they usually think of the transgressions committed by the top-level executives who successfully managed to destroy the company's reputation and achievements.

The top managers operated in a corrupted fashion They did not even try to produce a positive symbolic management within the organization. Thus, the failure of the company was also the reflection of their moral failing. As a matter of fact, not only there was an aggressive and arrogant culture, but managers were mainly driven by corruption, and greed. They had no space for ethics; their main goal was trading for financial gains. Managers at Enron did not focus on long term goals. Moreover, they did not take care of their shareholders. Executives had neither an open relationship nor a shared vision with their employees. Instead, they were only interested in enriching themselves; according to their philosophy any situation could bring profits, even though this might involve crossing ethical lines. Indeed, the culture of pride, arrogance and greed at Enron made executives look for whichever solution in order to get more and more profits. Because executives wanted to benefit themselves first, all the decisions they took in the board room were made on the only account of how they could earn more. For all the above-mentioned reasons, operational and financial controls were inadequate,

The first important factor in the Enron case advanced interests on share price. The second factor how the company was liberalized over the past 20 years along with the reduction of legal responsibility of investment banks and accounting firms. The third factor, which is the most important, was the immediate alteration of pay packages given to investment bankers, executives, and accountants (Barreveld, 2002). In this case, the factors mentioned above was a result of the culture implemented by the executive leaders whom were influenced by unethical behaviors they engaged in. One could agree that Enron was definitely reaping the bad seeds that the

As the management of Enron continued with their fake growth, Enron’s financial contracts started to became more and more complicated.

During 1990S, there were numerous new competitors advent into the market. Those new entrants pose a threat to Enron’s profit. Enron in order to maintain their high return and dominance in their field,

Market value has dropped 50% in 2017 alone, which could hinder the company’s ability to grow financially.

Widely known as the champion of the energy industry, Enron is suddenly faced with a corporate crisis in the form of a scandal. This scandal involves not only Enron’s accounting practices but also its corporate governance and culture (Lawrence & Weber, 2008). This report will recommend some potential strategies for Enron to move forward from the scandal. To do this, we must incorporate stakeholder theory, which “argues that corporations serve a broad public purpose; to create value for society” (Lawrence & Weber, 2014, p 6.). This means that Enron must take responsibility for the scandal it created and take actions to regain its stakeholders’ confidence. To accomplish this, we will first identify and analyze Enron’s primary

It’s noticeable how the company’s operations have been deteriorating as they are having a more difficult time translating sales into cash. Their A/R turnover is not where it needs to be, and in line with that, their liabilities are increasing as well. The company has also been inefficient with the use of their assets as their current activity ratios are not up to par with the industry standards.

The story of Enron begins in 1985, with the merger of two pipeline companies, orchestrated by a man named Kenneth L. Lay (1). In its 15 years of existence, Enron expanded its operations to provide products and services in the areas of electricity, natural gas as well as communications (9). Through its diversification, Enron would become known as a corporate America darling (9) and Fortune Magazine’s most innovative company for 5 years in a row (10). They reported extraordinary profits in a short amount of time. For example, in 1998 Enron shares were valued at a little over $20, while in mid-2000, those same shares were valued at just over $90 (10), the all-time high during the company’s existence (9).