The Enron Scandal Of The United States

1855 Words Jul 13th, 2015 8 Pages
The Enron Scandal is still viewed today as one of the largest corporate bankruptcies in history. The greed that spilled throughout the organization started with gradual disregard for basic accounting principles. Initiated by small discrepancies in the company financial system became extreme financial crimes that left many without jobs and many investors penniless. The Enron scandal led to legislation that tightened restrictions on accounting practices in the U.S. requiring more strict compliance with GAAP. Kenneth Lay founded Enron Corporation in 1985. This new energy company was the result of a merger between the natural gas pipeline companies Houston Natural Gas and InterNorth. Throughout the 1990s the company was viewed as a “…new-economy maverick that forsook musty, old industries with their cumbersome hard assets in favor of the freewheeling world of e-commerce” (Li, 2010). Enron pioneered the selling of commodities such as electricity at market prices online. Enron was able to make substantial growth after Congress passed legislation to deregulate the sale of natural gas. The legislation was able to drive higher revenue margins in the early 1990’s. Annual revenues rose quickly from 9 billion in 1995 to 100 billion in 2000. By the end of 2000, Enron’s Market cap rose over 60 billion, 70 times their earnings and 6 times their book value. These overwhelming numbers and confusing balance sheets led to suspicions on Wall Street in early 2001. By October 2001 Enron’s…

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