Fall of Enron

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The Fall of Enron 1. Why was Enron such an admired company prior to 2000? What innovation do they bring to the table? Be specific and support your statement with concrete information. Prior to the year 2000, Enron Company, established in the mid-80s, caused the admiration worldwide because of its fast rise of revenue both in the local and international stock market in a short period of time. Enron’s operating income in the year 2000 was stated in $100.7 billion and its after-tax net income was reported in $979 million (Palepu & Healy, 2013). The enterprise’s business model was based on energy-trading, centered in the deregulated energy marketplace, and in its significant investments in several large-scale commodities and other broad…show more content…
b. Firm governance? c. Incentive system? d. Conflict of interest between different parties? e. And…? In the accounting area, Enron failure was due to an intentional distortion of its financial statements to the affected groups, the stockholders and the overall population in general (Thomas, 2002). The commercial business displayed that they had made many partnerships with other firms and utilized them to cover its debts. There was no need to do fraudulent reports, unless there was an underlying bad intention of damaging the image and reputation of the organization. Revealing a dishonorable statement of a company’s financial state will be forever an unsafe judgment to make. Regarding to the firm governance area, the real critical origin of the Enron’s downfall was its business corporate behavior also named as governance behavior (Ackman, 2002). It is very well-known that every industry has a goal, which goes in alignment with its vision and mission. These should be their leading force in performing resolutions that are fair and just for their long-term viability and equilibrium. Additionally, all businesses also have their obligations not only to their board members but also have to transmit the correct service to their staff which includes their investors, employees, shareholders, and to the overall public in general. Whatever institution that depends on deeply in making revenues through unethical transactions and investments without truthfulness and without

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