Enron And Its Impact On Corporate Business Practices

Kenneth Lay, former Chairman and CEO, and Jeff Skilling who was also a CEO and COO of Enron, had the major part in Enron when it collapsed and went bankrupt. Because of deregulations Ken Lay enter Enron in 1985 through a merger a vast network of natural gas and pipeline. Later, Enron grew into an energy trading company which was worth $68 billion in 2000. Lays family was poor, which made him ambitious to earn wealth regardless of the path he takes, hence, unethical professionalism at Enron. Enron took advantage of his decision to let gas prices float on the market. Rich Kinde found out about Enron’s oil scandal in 1987 by the misappropriation of

Jumping right into the summary then. Enron was one of the most successful corporations in America during its prime. Marketing electricity and other commodities, as well as, providing financial and risk management services to other companies were the main types of business that Enron conducted. However, Enron’s successful appearance was found out to be a façade, when it came out that the corporation was making a plethora of unethical business moves. Once the corporation’s actions became public, Enron’s fall from grace quickly followed. (Johnson, 2003)

Enron was one of the largest corporations in the United States. Enron was reporting revenues of over $100 billion, and its stock was being sold for $80 a share (Goethals, Sorenson, & Burns, 2004). However, it was using shady and unethical business practices, such as listing inflating its revenue and hiding debts in special purpose entities. Eventually, their faulty accounting caught up with them, and their market share plummeted. This was credited as one of the worst auditing failures.

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.

In October of 2001, Enron announced a third-quarter loss of $618 million. The SEC and the U.S. Department of Justice both launched investigations into the sudden fall of the company and found that Enron had overstated their earnings by an estimated $586 million since 1997. Top executives in the company sold their majority shares days before the company’s collapse leaving lower level employees with worthless stocks in their pensions causing them to lose the majority of their life savings (CNN). As of today, charges have been brought against at least sixteen employees and executives in connection with Enron on counts of wire fraud, securities fraud, insider trading and money laundering among others. Flashback to June 17, 1972, and the

The Enron corporation was an amalgamation of Houston Natural Gas and Internorth two of the largest natural gas suppliers in the United States. It was built upon the company 's ability to convince congress to deregulate the sale of natural gas through supplying electrical pieces at market prices. This allowed Enron to begin to sell power at higher prices therefore driving their revenue up. The company also began to spread its grasp out of natural gas and into a myriad of other power sources across the globe including water, pulp and paper plants. This was all done through a massive series of loopholes and massive amounts of money being funneled into Congress to lobby against regulations of such activities.

Enron started as a sound company that had a promising future in the oil and energy business. The companies CEO and CFO were charged on 35 different accounts of fraud, conspiracy, and insider trading that cleared most of its employee’s retirement pensions and billions of dollars for others (Unknown, 2016). It is impossible to account for every transaction that a company will produce, but the revamping of government

In 1985 Ken Lay took over a couple of big name gas pipeline companies that came together and thus the infamous Enron Corporation began. They offered a variety of services that were not limited to natural gas but also included electricity, communications, and many energy related services. Together, CEO Jeffrey Skilling, Chairman Ken Lay, and CFO Andrew Fastow were able to bring transformation to Enron. They created a multi-billion dollar Wall Street celebrity out of an electricity and gas company. There was an unusual growth spurt in Enron’s profit of about $69 billion from 1998 to 2000. This caught the attention of an anonymous

Enron executives and accountants cooked the books and lied about the financial state of the company. They manipulated the earnings and booked revenue that never came in. This was encouraged by Ken Lay as long as the company was making money. Once word got out that they were disclosing this information, their stock plummeted from $90 to $0.26 causing the corporation to file for bankruptcy.

To the outside world, the company seemed prosperous. Stock prices rose dramatically and reported profits exceeded expectations yearly. Fortune magazine even called Enron the “country’s most innovative company.” In reality, it was all an elaborate illusion to hide the fact that Enron was drowning in debt. The chief financial officer, Andy Fastow was tasked with covering up Enron’s financial crisis. Fastow established hundreds of fake limited liability companies to create the illusion that Enron was earning profits by conducting business with these entities. They

Enron went from modestly outperforming the Standard & Poor’s 500 in the early 1990’s to drastically outperforming it in 1999 and 2000. In 1999 and 2000, Enron stock increased 56 percent and 87 percent, respectively; compared with to only a 20 percent increase and 10 percent decline for the index during the same years (Healy and Palepu, 3 2003). While these increases were originally attributed to innovation (being rated the most innovative company in America by Fortune), it was later found that the stock increases were due to severe financial statement manipulation. Ultimately, Enron stock fell to under $1.00 by the end of 2001 and entered into bankruptcy on December 2, 2001 (Healy and Palepu, 3 2003) and Enron’s former chairman and CEO Kenneth Lay and former CEO and COO Jeffrey Skilling were sentenced to prison for lying to Wall Street and investors about their crumbling finances (Johnson, 2006).

Enron, a provider of natural gas, electricity, and communications began when two large gas pipeline companies merged together in 1985. CEO Jeffrey Skilling, CFO Andrew Fastow, and Chairman Ken Lay worked diligently throughout the 1990s to build the company to be the largest most successful of its time. Having its name in Wall Street was becoming a norm for the company as it grew beyond all hopes and expectations. The company had become unstoppable as shares increased and partnerships became stronger. Believing so much in the company Business Ethics states, “Jeffrey Skilling went so far as to tell utility executives at a conference he was going to “eat their lunch” (Farrell, Fraedrich,

Enron Corporation was an energy company founded in Omaha, Nebraska. The corporation chose Houston, Texas to home its headquarters and staffed about 20,000 people. It was one of the largest natural gas and electricity providers in the United States, and even the world. In the 1990’s, Enron was widely considered a highly innovative, financially booming company, with shares trading at about $90 at their highest points. Little did the public know, the success of the company was a gigantic lie, and possibly the largest example of white-collar crime in the history of business.

Enron was once a very large and powerful company that was admirable to many but now it is the focus of many examples on what not to do in business. The poor corporate governance system in place at Enron not only caused the company to fail but it also ruined many people’s lives. People had the idea I their head that Enron was too big to fail but that kind of assumption should never be made about a company. Enron is an example of a company that appears to be following all the rules from the outside but a deeper look reveals all that they had been doing wrong.

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).