Fall of Enron Essay

Decent Essays

Q1- Who were the key stakeholders involved in, or affected by the collapse of Enron? How and to what degree were they hurt or helped by the actions of Enron management?
Ans- The key stakeholders affected by the collapse of Enron were its employees and retirees. Stakeholders and mutual funds investors lost $ 70billion market value. Banks were also affected by the meltdown of the company. They included big banks like J P Morgan Chase and Citigroup. Not only the stakeholder and bondholder lose out, the confidence in the company also fell. This was the major setback for the company. The actions of Enron management left a deep scare for its 4000 employees which lost out their jobs and also impacted others around them. Some blamed Arthur …show more content…

All the above issues that led to the bankruptcy of the company were perpetuated by the actions of Lay, Skilling, Fastow and other executives. They all led to the collapse of the company. Lay did not enquire about the decisions that Skilling and Fastow were taking. He just approved to everything that they kept in front of him. Skilling always wanted to keep up to the Wall Street expectations and for this he gave pressure on his executives to find new was to hide the dept. This was the major setback for the company as they didn’t know that in future everything was going to come out and it would have led to bad consequences. Lay did not enquire about all this and approved of all the work Skilling was doing.

Q3- What steps should be taken now by corporate managers, stakeholders, and policy makers to prevent a similar event from occurring in the future?
Ans- People should not lie about the company’s financial status just to bring it up In the market. Eventually the truth is going to come out one day or the other. Auditors should properly keep track of the finances. Managers, stakeholders and directors should be aware of everything that is happening in the company. Policy makers should think about what steps they are taking and how it will affect other people lives. They should not make policies for the benefits of the big companies who give them finances for their political endeavours.

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