Corporate Malfeasance : Global Recession And The Occupy Wall Street Movement

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Corporate malfeasance has earned a place among the defining themes of the last decade and a half, helping to give birth to the global recession and the Occupy Wall Street movement. Enron, a Houston based commodities, energy, and service corporation, created arguably one of the worst scandals of the past two decades. Due to reporting tactics implemented by Chief Executive Officer Ken Law and Chief Executive Officer Jeff Skilling, which hid huge debts from the company’s balance sheet, the company filed for bankruptcy, shareholders lost $74 billion, thousands of employees and investors lost their retirement accounts, and many employees lost their jobs. Before the accounting scandal became public in 2001 due to whistleblower and Vice President…show more content…
Enron suffered; its trading business depended on solid finances and since parties dealing with Enron were beginning to suspect Enron would be unable to meet contracts, desperation ensued and Enron turned to its rival, Dynergy, to save the day (Gordon). This is where things took a turn for the worst, on November 8th, Enron released its revised quarterly earnings statement which had shown a reduction of profits of $586 million since 1997. The company claimed that this twenty percent reduction in profits over that period were “mostly due to improperly accounting for its dealings with partnerships run by some company officers” (Gordon). The resulting third quarter report was devastating and as a result Dynergy called off the merger with Enron. Furthermore, just six weeks after the crisis first broke, on December 2, Enron filed for bankruptcy. Although there were many immediate factors, such as admissions of massive accounting malfeasance, there were also more complicated factors which had led to the company’s demise. There is a strong reason to believe that Enron’s misuse of the Financial Accounting Standards Board’s 2004 Exposure Draft, fair-value measurements played a large part in the misrepresentation of accounts. Fair value measurements require

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