Enron : Ethics And Law

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.

As with much of Enron, their outward appearance did not match what was really going on inside the company. Enron ended up cultivating their own demise for bankruptcy by how they ran their company. This corrupt corporate culture was a place whose employees threw ethical responsibility to the wind if it meant financial gain. At Enron, the employees were motivated by a very “cut-throat” culture. If an employee didn’t perform well enough, they would simply be replaced by someone who could. “The company’s culture had profound effects on the ethics of its employees” (Sims, pg.243). Like a parent to their children, when the executives of a company pursue unethical financial means, it sets a certain tone for their employees and even the market of the company. As mentioned before, Enron had a very “cut-throat” attitude in regards to their employees. This also became one Enron’s main ethical falling points. According to the class text, “employees were rated every six months, with those ranked in the bottom 20 percent forced to leave” (Ferrell, 2017, pg. 287). This system which pits employees against each other rather than having them work together will create a workplace of dishonesty and a recipe of disaster for the company. This coupled with the objective of financial growth, creates a very dim opportunity for any ethical culture. “The entire cultural framework of Enron not only allowed unethical behavior to flourish,

Bryn Bradshaw-Mack “Enron: The Smartest Guys in the Room”: A Legal Perspective Often times in business as the stakes get bigger and better, the methods in which they are obtained get worse. Throughout the film, “Enron: The Smartest Guys in the Room”, this unfortunate truth is frequently apparent. There are numerous instances when Enron executives perform potentially unlawful practices in order to profit the company, and subsequently themselves. One example of this is when Jeffrey Skilling, chief executive officer at the time, demanded that Enron’s accounting system be changed to “aggressive accounting” in order to hide the company’s debt and mislead its investors.

Enron’s ride is quite a phenomenon: from a regional gas pipeline trader to the largest energy trader in the world, and then back down the hill into bankruptcy and disgrace. As a matter of fact, it took Enron 16 years to go from about $10 billion of assets to $65 billion of assets, and 24 days to go bankruptcy. Enron is also one of the most celebrated business ethics cases in the century. There are so many things that went wrong within the organization, from all personal (prescriptive and psychological approaches), managerial (group norms, reward system, etc.), and organizational (world-class culture) perspectives. This paper will focus on the business ethics issues at Enron that were raised from the documentation Enron: The Smartest Guys

The tale of Enron presents a unique perspective on success. In the short span of 24 months, Enron transformed from being the top firm in its industry to one that filed for bankruptcy. The reflection about how the tides changed in such a short period uncovers many surprising truths. In its glory days Enron beamed billion dollar profits each quarter, however this success was all a part of an elaborate scheme. Behind the veil of smoke and mirrors was a series of deceptive and unethical accounting practices. For Jeff Skilling and Kenneth Lay it was always about outward perception and to them this revolved around the stock price. If the stock price kept rising, as far as they were concerned Enron was doing just fine. The case of Enron is the

In review of the Enron case, executives higher up exploited their privileges and power, participated in unreliable treatment of external and internal communities. These executives placed their own agendas over the employees and public, and neglected to accept responsibility for ethical downfalls or use appropriate management. As a result, employees followed their unethical behavior (Johnson, 2015). Leaders have great influence in an organization, but policies will not be effective if they do not abide by the policies established. “ Enron: The Smartest Guys in the Room” demonstrates how the nature of people do not change, whether it’s terminating employees as way to handle issues, or ongoing fascinations for profitable advances. Enron’s collapse produced a culture that prioritized profitable gains.

Enron’s ride is quite a phenomenon: from a regional gas pipeline trader to the largest energy trader in the world, and then back down the hill into bankruptcy and disgrace. As a matter of fact, it took Enron 16 years to go from about $10 billion of assets to $65 billion of assets, and 24 days to go bankruptcy. Enron is also one of the most celebrated business ethics cases in the century. There are so many things that went wrong within the organization, from all personal (prescriptive and psychological approaches), managerial (group norms, reward system, etc.), and organizational (world-class culture) perspectives. This paper will focus on the business ethics issues at Enron that were raised from the documentation Enron: The Smartest Guys

Enron is viewed by many as the quintessential corrupt corporate juggernaut. Corporations are nothing more than a collection of people. If a corporation is corrupt than it must be filled with corrupt employs, and led by a front office devoid of moral standards, right? Perhaps this is not entirely true. Certainly an element of corruption was present in the case of Enron, the number of corrupt employees may not have been as encompassing as presumed. When asked to rate their level of honesty, most would respond that they are honest. In actuality, most people are not completely honest, and their level of dishonesty is correlated with their ability to rationalize the dishonesty and preserve their self- image as an honest and admirable person

Ethics is a decision one makes in knowing the right thing to do and actually doing the right thing. They are the rules of behavior based on one’s belief of what is morally good and bad. A person may hear the word ethics and immediately think of government or the law. Not only does ethics have a role in government, it also plays a major role in business, including accounting. Schroeder, Clark & Cathey (2014) state that the “reason for a high level of ethical conduct is the need for public confidence in the quality of services provided by the profession” (pg. 624). Ethical conduct not only encourages a high standard of performance; it also encourages a high quality of professional

Being the president of a company would render many challenges, including the responsibility for establishing the values for the organization. Incorporating life experiences would be a great determinate in establishing such values, in addition to considering what has been witnessed in the past concerning the success and downfall of other organizations, such as the unethical decisions of the organizational leaders of Enron, realizing that Enron had a written policy, however choosing to value financial greed (Hansen, Alge, Brown, Jackson, & Dunford, 2013). Therefore, I would set expectations high, developing a code of conduct, along with the expected values of the company, which would include the value of integrity. By making it known on the front end that honesty is the best policy, in addition to living the example, employees will demonstrate trust and respect, therefore developing a strong work relationship.

Lay believed the ability of employees to reach full potential contributed to the company success. He also indicated his value in a “highly moral and ethical culture” and attempted to ensure this was realized within Enron (Ferrell, et al, p.321). While the indictment eluded that Lay had lied about finances, he persisted that he handled any identified items. This also raises concern about how much a CEO actually knows about misconduct in the business. The aggressive nature exhibited by Enron employees led to rules violations, many of which were approved through the proper channels. The complex format of checks and balances remove the possibility that the fall of Enron was the responsibility of a single individual. It was a combination of aggressive and questionable practices along with the failure of others to identify wrongdoings.

Ethical issues have greatly transformed in our lives since the great Enron, Xerox and other huge corporations proposed big profits showing earnings of billions of dollars and yet in reality facing bankruptcy. These corporations faced great trouble with the federals and state for manipulating financial statements. But not only corporations can be blamed on this, accounting firms were involved in this as much as the corporations were. With the business stand point, ethics comprises of principles and standards that guide behavior. Investors, traders, customers, and legal system determine whether a specific action is ethical or unethical. Ethical issue is a vast subject, but we will look at the niche

Question 1 Summarize 1 one page how you would explain Enron’s ethical meltdown: Enron was an energy company founded by Kenneth Lay in 1985 through a merger of vast networks of natural gas lines. Enron specialized in wholesale, natural gas, and electricity, and made its money as a wholesaler between suppliers and customers rather than actually owning any. Enron in fact didn’t own any assets, which made their accounting procedures very unusual. The lack of accounting transparency at Enron allowed the company’s managers to make Enron’s financial performance better than it actually was. The organizational culture at Enron was to blame for it’s ethical meltdown. Enron’s accounting scheme slowly began to erode its ethical practices, which soon led the culture of Enron to become a more aggressive and misleading business practice. Enron reported profits from joint partnerships that were not yet attained in order to keep stock prices up (or make wall street happy). As this was happening employees began to notice the ethics in senior management (leadership) deteriorating, and soon after they to would follow in their footsteps. Senior management thought they were saving their company from financial ruin and though lying was ok if it meant saving the company. Investors would surely sell their stocks if they really knew the situation the

Most of the world has heard of Enron, the American, mega-energy company that “cooked their books” ( ) and cost their investors billions of dollars in lost earnings and retirement funds. While much of the controversy surrounding the Enron scandal focused on the losses of investors, unethical practices of executives and questionable accounting tactics, there were many others within close proximity to the turmoil. It begs the question- who was really at fault and what has been done to prevent it from happening again?

Unfortunately, scandals like Enron are not isolated incidents and the last decade has offered Americans a disheartening perspective with comparable scandals like that of WorldCom and Tyco, Sunbeam, Global Crossing and many more. Companies have a concrete responsibility not just to their investors but to society as a whole to have practices which deter corporate greed and looting and which actively and effectively work to prevent such things from happening. This