The Impact Of Enron 's Corporate Culture

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Varying Impacts Enron’s corporate culture had a great deal to do with the benefits it gave to its employees as well as its top managers beginning with overlooking unethical behavior as long as it provided monetary value. Their corporate culture is described as arrogant, and rightfully so, by the end of 2000 Enron had become the sixth largest energy company in the world (United States Government Publishing Office, 2003, p. 67). This mindset of superiority and pride lead employees to believe they could increase risks without regard for the consequences. Excellence was expected of Enron employees at all cost. Their success in business lead to various incentives, those that ranks 1’s and 2’s in their peer evaluation was often rewarded with…show more content…
3). Top managers disregarded ethical behavior and with the aid of statistical modeling and trading for profit, Enron had a recipe destined for bankruptcy. “The most traditional form of shareholder and management alignment under the optimal contracting view of executive compensation is through stock ownership by the manager” (Munzig, 2003, p. 12). The self-interest of managers has led to a division between the company and shareholders and the misappropriation of finances. In October 2001, Enron had announced that they were taking a $544 million dollar charge against earnings, which lead to a reduction in shareholder equity by $1.2 billion due to transactions related to a company owned by Enron’s CFO (Munzig, 2003, p. 19). By concealing the financial dealings of the company through SPE’s and partnerships this had led to information irregularities between those at Enron who were privileged to understand the financial structures and the shareholders who did not. This lack of transparency was a failure especially when shareholders rely on information to ensure the success of the business. Enron’s top managers exercised great control of their employees and their financial relations. The rights the Enron exercised were to expect nothing less than the best from all those involved. They were an in your face company with a banner displaying “From the World’s Leading Energy to the World’s Leading Company” (Hosmer, 2011, p. 173). Such pride and possibly arrogance was
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