The Enron Implosion and the Loss of Respect for the Accounting Profession

This now bankrupt company, misappropriated investments, pension funds, stock options and saving plans after deregulation and little oversight by the federal government. However, with deregulation an increasing competitive culture emerged as the CEO Jeffry Skilling motto to his organization was to “do it right, do it now, and do it better” this was the rally cried that pushed ambitious employees to engage in unethical behavior as Enron use deceptive “accounting methods to maintain its investment grade status” (Sims, & Brinkmann, 2003, pp.244-245). As Enron continued to flourish and received accolades from the business community this recognition drove executives to continue the façade of bending ethical guidelines before their public fall from

Finance and accounting remain the core of the Enron story, but the company's cowboy culture -- and the way top bosses such as Mr. Fastow and former Chief Executive Jeffrey Skilling inspired it -- are also key to understanding what happened in this historic business debacle. Only now is the full scope becoming apparent, amid government probes and a growing willingness by some former and current employees to speak about it.

Enron was considered to be one of the most innovative companies at its time because of its fast growth, and unique commodities. Little did most people know, Enron was abusing this power. Enron’s executives created a corporate culture that promoted cutthroat competition between employees. These extreme cutthroat environments can easily brainwash employees

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,

Enron was a publicly traded energy company formed in 1985 by Kenneth Lay when Internorth acquired Houston Natural Gas; the company, based in Houston Texas, Enron (originally entitled “EnterOn”, but was later subjected to abbreviation), worked specifically in power, natural gas, and paper and even ventured into various non-energy-based fields as they expanded, including: Internet bandwidth, risk management, and weather derivatives. Several years after the founding of the company, Enron hired a man by the name of Jeffrey Skilling, a former chemical and energy consultant, who, upon promotion, created a team of high-level administrative employees who, by using special purpose entities, lackluster reporting of finances, and unethical accounting practices, hid billions of dollars of debt from unsuccessful arrangements and ventures from stock holders and the U.S. Securities and Exchange Commission. Enron executives achieved this scheme by using a controversial accounting method entitled “mark-to-market accounting,” which in essence, assigns value to financial commodities based on their projected market values; mark-to-market accounting is the opposite of cost-based accounting which records the price of a commodity at the purchase price. As a result of this new method, Enron’s worth skyrocketed to over $70 billion at one time, only to collapse miserably several years later—ultimately costing thousands upon thousands of people their jobs, pensions, and retirements. Enron’s employees

Whenever someone hears the word "Enron" today, they usually think of the transgressions committed by the top-level executives who successfully managed to destroy the company's reputation and achievements.

Ken Lay and Jeffrey Skilling were the team known as The Smartest Guys in the Room. This powerhouse team of two people coordinated their work to meet a shared common objective. That objective was to make money. This objected created a culture that was one of “intense pressure to keep Enron stocks on an ever-rising curve.” (Stephens

Analysis of Enron: the Smartest Guys in the Room One of the greatest achievements of Enron: the Smartest Guys in the Room, is the documentary’s ability to so meticulously and cohesively deconstruct the corporation’s practices, from top to bottom, to illustrate even for the layman just how fundamentally illegal and reckless its leadership was. One of the reasons that the film’s title (which is based on and taken from the book of a very similar name) is so fitting, is that the sorts of business ventures that Enron pursued—be it their Blockbuster bandwidth scheme, their Dabhol power plant project, or their California energy price-gouging—required such immensely-detailed, calculated planning and maneuvering, that the notion that those at the top didn’t know

There are a number of appalling facets about the 2005 documentary Enron: The Smartest Guys in the Room. This film details the rise and collapse of one of the most successful companies in modern times in the United States, and demonstrates a culture of debauchery that seemingly extended beyond its doors to encompass aspects of politics, legislation, banking, and general accounting principles and practices. In that respect, it is not without difficulty that the prudent viewer can determine just what the chief injustices were that the company begat during its nearly 20 year history. The real losers in this story have to be its employees, many of whom lost jobs, medical benefits, and retirement packages as the company pronounced its bankruptcy. It did so, however, in a fashion in which the viewer's natural proclivities of passion are to focus on the exceedingly cowardly and shameful way in which top management supervised the bankruptcy, while maximizing profits and minimizing their own personal damages until, of course, they were hit with criminal indictments.

Enron was incorporated as an energy company in 1985. Headquartered in Houston, Texas, Enron was the world’s largest energy company by the end of 2001, responsible for 25% of the world’s contracts for energy trading. Enron was a strong company, holding a steady position in Fortune’s 100 best companies to work for and a sign in the company’s lobby that read “WORLD’S LEADING COMPANY”. Being an employee of Enron definitely had its perks as well. “Employees at Enron’s headquarters had access to an on-site health club, subsidized Starbucks coffee, concierge service that included massages, and car washes, all for free. Those employees with Enron Broadband received free Palm Pilots, free cell phones, and free wireless laptops” (Jennings 233). It appeared as though the company had everything going for them, but it wouldn’t be long before the company took a turn for the worse. In late 2001, “a week following credit agencies’ downgrading of its debt to ‘junk’ grade, Enron filed for bankruptcy,” the largest recorded bankruptcy in the United States ($62 billion) at that time (Jennings 233).

Enron was a business conglomerate during the 1990s, formed by the merger of smaller oil and energy companies. Houston executives Kenneth Lay (Chairman), Jeffrey Skilling (chief executive officer (CEO) and Andrew Fastow (chief financial officer (CFO) parlayed their new mega-company into a favorite Wall Street company, bragging of record profits with negligible losses. During the 1990s, the three senior executives changed Enron from a traditional gas and electricity company into a $150 billion energy corporation. For instance, from 1998 to 2000 only, Enron’s returns rose from approximately $31 billion to over $100 billion, making the company to be the seventh biggest conglomerate of the Fortune 500. Unidentified to nearly everybody, this picture was the result of one of the largest swindles in financial history (Ferrell, Fraedrich & Ferrell, 2013).

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

Exploring Enron as it goes from infancy to final explosion, is a valuable mechanism for

Enron started out as a dominant culture. Kenneth Lay and Jeffrey Skilling had a vision of how they wanted the company to be and where they wanted it to go. When Lay put Skilling in charge, he made it his mission to hire the best traders, recruiting them from the best schools and other companies. They gave employees corporate rewards like concierge services and a company gym. As the company grew larger, the culture began to take a turn for the worse. Enron demonstrated a few cultural dimensions such as high risk-taking, outcome orientation, and aggressiveness. Skilling established the Performance Review Committee which was an extremely harsh ranking system. It was

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.