Enron’s Demise ~ Where There Warning Signs?

Enron was firstly a natural gas pipeline company that combine as the combination of Nebraska and Omaha’s natural gas company, Houston Natural gas and InterNorth. It took 15 years from 1985 to 2000 to climb up into the one of the largest gas company in North America. Behind the successful of the company, it was a story of betrayal and

On December of 2001, the nation’s seventh largest corporation valued at almost $70 billion dollars filed for bankruptcy. Illegal and fraudulent accounting procedures would led to the demise of the company. Over 20,000 people lost their jobs, and about $2 billion in pensions and retirement funds disappeared. Despite all this, Kenneth Lay, Jeffrey Skilling and Anthony Fastow profited greatly from Enron. These events resulted in the implementation of new legislation on the accuracy of financial reporting for public companies. The fall of Enron became known as the largest corporate bankruptcy in the United States at the time.

Enron was an energy trading and communications company located in Houston, Texas. During 1996-2001 Enron was given the name of America’s Most Innovative Company by Fortune magazine as it was the seventh-largest corporation in the US. The problem that led this company to bankruptcy was due to the fact that fraudulent accounting practices took place allowing Enron to overstate their earnings and tuck away their high debt liabilities in order to have a more appealing balance sheet (Forbes.com, 2002). Enron’s accounting team “cooked” the books to every meaning of the word so that their investors would not see anything wrong with the failing organization. This poorly structured company led people to jail time, unemployment, and caused retirement stocks to be dried up. Enron had a social responsibility to its stockholders and rather than being up front and honest about the failing company they hid every financial flaw in order to keep receiving money from its investors. By Enron not keeping a social

Enron was an American energy, commodities, and Services Company based in Houston, Texas. Before the 21st century began Enron employed over 20,000 people.

Enron was facing risks, risks from every angle. You can see from the history to the demise of the company everything was based on risk. Even when it came to the personal lives of those in charge, you can find some type of risk. Being a Houston native, I did not quite understand the reaction to Enron. I did not understand why it went so far as to changing the name of a stadium from Enron to Minute Maid Park. I was only a teen at the time, but now I am not. I now hope to explain my opinion on how the past, the executive’s and outliers were red flags prior to the Enron crisis. My thoughts on how they could have handled the matter. Lastly, express what I would have done if I was an executive or general council to such a company.

Enron was formed in 1986 by Ken Lay (“Enron Case Study”, n.d). It was an energy and service company based in Houston. “The early years of Enron were modest, and despite suffering financial woes and tremendous debt for several years, Enron survived.” (Rafraf & Haug, 2013). Enron was the 7th largest company on the Fortune 500 in the year 2000 with assets of $65 billion and revenue of over $100 billion (“Enron: Quality Assurance”, 2016, p 17). Despite of revenues in 2000, Enron filed for bankruptcy in 2001 affecting billions of shareholders. The Enron collapsed despite of being audited by one of the “Big Five” accounting firms called Arthur Anderson. What caused the Enron failure? What was Arthur Anderson’s role in Enron’s failure? Enron had

Enron began as a pipeline company in Houston in 1985. It profited by promising to deliver so many cubic feet to a particular utility or business on a particular day at a market price.

The particular causes of Enron 's failure are complex. There are lots of issues that have to do with the Enron collapse. Enron is a company that was called as Houston Natural Gas and then Enteron. It becomes politically connected player in the new deregulated market of energy. At one time Enron appears to have been a successful and innovative enterprise, principally engaged in trading and dealing in energy-related contracts. At some point it expanded by making substantial investments in a variety of large-scale projects. Although some of these were initially successful, others resulted in Enron incurring large economic losses. Then it appears to have embarked on covering up losses and manufacturing earnings. This succeeded for a time, but

The company Enron was formed in 1985 after two natural gas companies, Houston Natural Gas and InterNorth merged together. Kenneth Lay, former chief executive officer of Houston Natural Gas was named CEO of Enron and a year later, Lay was assigned to the chairman of Enron. A few years later, Enron launched a website to allow customers to buy stock for Enron, making it the largest business site in the world. The growth of Enron was rapid; it was even named seventh largest company on the Fortune 500 list; however things began to fall apart in 2001. (News, 2006). In the third quarter of that same year, Enron posted an enormous loss of over $600 million in four years. This is one of the reasons why one of the top executive resigned even though he had only after six months on the job. Their stock prices fell dramatically. Eventually, Enron filed for bankruptcy protection. This caused many investors to lose money they had invested in the company and employees to lose their jobs and their investments, including their retirement funds. The filing of bankruptcy and the resignation of one of the top executives, also led to an investigation by the U.S. Securities and Exchange Committee, which proved to be one of the biggest scandals in U.S. history. (News, 2006). All former senior executives stood trial for their illegal practices.

All of the prior represents the business side of the downfall of Enron. That being said, businesses fail all of the time. The reason why Enron Corporation and its executives will always live in infamy is not because the company failed, but how and why the company failed. How, exactly, does a company worth about $70 million collapse in less than a month? It became clear that the company not only had financial problems, but ethical problems that started from the top of the company and trickled down. A key player in these problems was Jeffrey Skilling. He was a man brought to the company by Ken Lay himself. Skilling brought his own accounting concept to the company. It was called mark-to-market accounting. This concept allowed Enron to record potential profits the day a deal was signed. This meant that the company could report whatever they “thought” profits from the deal were going to be and count the number towards actual profits, even if no money actually came in. Mark-to-market accounting granted Enron the power to report major profits to the public, even if they were little or even negative. It became a major way

Enron’s overall business practices are not ethical. One business practice of Enron that I think poses an ethical issue is their attitude towards its employees. They create a highly competitive and a result oriented business atmosphere. They used a system where they would rank employees every half a year and fire employees who ranked on the bottom 1/5 of the scores. This kind of attitude where only results matter and if you don’t produce anything good you will get fired will only hurt the company. This promotes unethical behavior and getting what needs to be done to get good results no matter what and if you do well you will receive big bonuses. This approach towards Enron’s employees did not have very good utilitarian reasoning. This

Enron Corporation was formed as the result of the July 1985 merger of Houston National Gas and InterNorth of Omaha, Nebraska. Their headquarters were located in Houston, TX. In its earlier years, Enron was a

Enron Cooperation, is a company that was based in Houston Texas and was an energy company. This company filed bankruptcy in 2001 leaving a lot of its employees that had no knowledge about what was going on jobless and the company investors losing a lot of money. This was one of biggest companies in the united states, it had a lot of assets all over the country and was operating on a lot of profit that nobody knew how and why. The movie, “Enron, The smartest guy in the room” shows that the company was cooking their books making it look like the company was making a lot of profit. The movie starts by introducing the big scandalous bosses of Enron, Chairman Kenneth Lay, CEO Jeff Skilling and CFO Andrew Fastow. The narrator describes the company as a cooperation that is greedy and fraudulent and later turns bankrupt. We are showed that top executives of Enron held their own personal accounts and transferred a millions of dollars all the time.

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).

Enron fake their financial statement and make it seems positive compare to its true value, therefore Enron Corporation was one of the favorite in Wall Street. That’s the reason why there are able to get non-stop financial support and expand into different impossible ventures. The company stock grow really fast like flying