Enron 's Strategies Of Enron

After reviewing “The smartest guys in the room”, it is readily apparent that once this company stepped off the path it was doomed to self-destruction. The charismatic leadership of Ken Lay and Jeff Skilling was a compelling factor, propelling this company to epic proportions prior to its demise. The PRC implementation, made an environment that pushed social facilitation and social learning theory to the outer limits. The focus of the company was to bring conceptual ideas to market and to garner immediate profits from them. The employees became disciples of Lay and Skilling and sought only results and profits, they never questioned the moral implications of their actions.

“Through its subsidiaries and numerous affiliates, the company provided products and services related to natural gas, electricity, and communications for its wholesale and retail customers” (Ferrell, Fraedrich & Ferrell, 2015, p. 486). A company’s corporate culture has a lot to do how efficient the company is, and how the company avoids negative situations such as bankruptcy. Enron was involved in numerous financial scandals, and the corporate culture of Enron played a large part in these scandals. The corporate culture at Enron had an arrogant aura that plagued the company. “This overwhelming aura of pride was based on a deep-seated belief that Enron’s employees could handle increased risk without danger” (Ferrell, Fraedrich & Ferrell, 2015, p. 487). Getting involved with major risks combined with thinking there would not be any consequences contributed to Enron’s bankruptcy.

The Enron scandal has far-reaching political and financial implications. In just 15 years, Enron grew from nowhere to be America's seventh largest company, employing 21,000 staff in more than 40 countries. But the firm's success turned out to have involved an elaborate scam. Enron lied about its profits and stands accused of a range of shady dealings, including concealing debts so they didn't show up in the company's accounts. As the depth of the deception unfolded, investors and creditors retreated, forcing the firm into Chapter 11 bankruptcy in December. More than six months after a criminal inquiry was announced, the guilty parties have still not been brought to justice.

Enron’s demise was led by the arrogance and greed of senior executives. The belief was they had to be the best business leaders in the United States. Many also believe that there was a conflict of interest with the auditing firm because not only did they serve as the auditing firm, they also served as a consulting firm to Enron. This enabled them to fabricate financial statements by building assets and hiding debt from investors. The loss of the recorded $1.2 billion shareholders equity meant that many victims of this fraud lost their jobs and their retirement funds.

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 use of special-purpose entities (SPEs) contributed to filing of bankruptcy by Enron, the largest in corporate

The use of insider information is illegal in the United States. Insider information is stock related information that can be obtained many ways to gain large, abnormal gains in the stock market. A popular way to gather inside information is from direct employees of the company. Information on stocks can either be illegal or legal. If the information is publicized for all current or future investors to use, then it isn't illegal. Illegal information becomes unlawful when it becomes privatized from the public, and to be only used by investors in the stock market. The action of using insider information isn’t considered illegal until the information is used in a stock market located in the United States, most commonly the New York Stock

Abstract Enron’s accounting for its non-consolidated special-purpose entities (SPEs), sales of its own stock and other assets to the SPEs, and mark-ups of investments to fair value substantially inflated its reported revenue, net income, and stockholders’ equity, and possibly understated its liabilities. We delineate six accounting and auditing issues, for which we describe, analyze, and indicate the effect on Enron’s financial statements of their complicated

The purpose of this article is analyze the downfall of the Enron Corporation and how the collapse of Enron Corporation consequence affected the United states financial market. Enron Corporation was the seventh largest company in the United States, and had the biggest audit failure. In this Research paper, it describes the reason of Enron Corporation collapse, including details of the internal/ external management, accounting fraud, and conflict of interest. Enron is the largest bankruptcy in America history!

In an ideal world there would be no corruption, no conflict, and no need for regulations. But this is not an ideal world and these problems happen every day. The business world is not exempt from this problem. Many businesses rely on ethics to help guide their company successfully. Our textbook Business Ethics: How to Design and Manage Ethical Organizations Denis Collins defines ethics as, “the set of principles a person uses to determine whether an action is good or bad” (5). All over the world there are businesses that take part in unethical behavior for many different reasons. Some countries even allow these unethical conducts, such as bribery, as a part of the norm. But for the United States, we have a stricter set of principles in place to try and stop unethical business practices from happening. That doesn’t mean that they don’t happen. Collins discusses a 2009 survey conducted by The Ethics Resource Center on 3,010 employees. Collins states that, “approximately half of the respondents observed at least one type of major ethical misconduct in the workplace during the past year, and nearly half of these violated the law” (6). If uncovered these corruptions are not tolerated and can lead to the fall of anything from a small mom and pop business to massive a Corporation. That is exactly what happened to the Enron Corporation back in 2001. In this essay I will discuss what exactly Enron is, the unethical business practices that occurred, and my opinion on the scandal and

The reprehensible story of the Enron Corporation’s rapid rise to success followed by their consequential disgraceful fall is one that has captivated the attention of the public for more than a decade. Not only was this scandal highlighted largely due to the widespread publication of the Enron Corp’s actions in the newspapers and television but must notably their substantial contradictory actions against not only basic ethics but Enron’s published Code of Ethics. Outlining the reputation of Enron, Kenneth Lay, Chairman and Chief Executive Officer (CEO), in a foreword within Enron’s Code of Ethics stated, “to be proud of Enron and know that it enjoys a reputation for fairness and honesty and that it is respected.” Even though Kenneth Lay spoke to the company as a whole on manners in ethics and good conduct, it was he and a number of other high placed executives who choose to ignore their own statements and act in complete disregard. When running an organization executives are held responsible and expected to maximize their shareholders interests and enhance overall capital gain while upholding to the practice of ethical processes and abiding by common governing virtues. Through the study of three key virtues (integrity, fairness, and justice) and applying them to the Enron case, it will quickly be seen how evident the leaders of this organization choose to neglect ethical practices and virtues to gain personal financial growth.

Enron, one of the most influential and profitable companies in utility, paper, and communications for numerous years, came crashing down and filed for bankruptcy in fall 2001 (Bottiglieri, Revile, and Grunewald 1). Houston National Gas and InterNorth fused together and created Enron in 1985. The company faced initial problems of debt and loss of exclusive rights to pipelines (Thomas 1). This accounting method allowed Enron to log entire profits from the life of a contract in the year the company made the deal (Stewart 116).

The scandal of Enron in 2001 lead the company to the bankruptcy. Enron is the largest bankruptcy reorganization in American history at that time. Undoubtedly, Enron is the biggest example of the audit failure. It is ever the most famous company in the world, but it also is one of companies which fell down too fast. In this paper, it describe the reason why Enron became an admired company in the world, the story of Enron 's rise and fall, the issues of internal and external auditing in Enron, the breaches of accounting and ethics that carried by Enron.

As competition increased and the economy started to plunge in the early 2000s, Enron struggled to maintain their profit margins. Executives determined that in order to keep their debt ratio low, they would need to transfer debt from their balance sheet. “Reducing hard assets while earning increasing paper profits served to increase Enron’s return on assets (ROA) and reduce its debt-to-total-assets ratio, making the company more attractive to credit rating agencies and investors” (Thomas, 2002). Executives developed Structured Financing and Special Purpose Entities (SPE), which they used to transfer the majority of Enron’s debt to the SPEs. Enron also failed to appropriately disclose information regarding the related party transactions in the notes to the financial statements.Andersen performed audit work for Enron and rendered an unqualified opinion of their financial statements while this activity occurred. The seriousness and amount of misstatement has led some to believe that Andersen must have known what was going on inside Enron, but decided to overlook it. Assets and equities were overstated by over $1.2 billion, which can clearly be considered a material amount (Cunningham & Harris, 2006). These are a few of several practices that spiraled out of control in an effort to meet forecasted quarterly earnings. As competition grew against the energy giant and their

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?