The Main Reasons Behind The Enron Scandal

900 Words4 Pages
The ENRON Scandal is one of the most well-known financial and ethical crisis within American history. The main reason was the Agency problem as we will illustrate with this paper. The "agency problem" generally raises to the conflict of interest between organization and ownership in a corporate enterprise. Owners is primarily focused on maximizing its capital through the business, while management is mainly interested in maximizing and stabilizing its salaries and benefits without suffering or taking a serious risk to them, they always want to be in the safe side and not engage or be in real loss in their financial life. 1- Research the reason behind the Enron scandal?? - The fall of Enron was an obvious and predictable breakdown, that the main reasons for…show more content…
This was clear about the management culture practices Obviously; the Enron disaster did not occur by chance. It was simplified by a corporate culture that encouraged greediness and fraud. Enron’s auditors (Arthur Anderson) showed absence of independence in their work. Enron's auditor, Arthur Andersen, was found guilty in a United States District Court. Independence of auditors by separating the consultancy and auditing part is also vital for the transparency aspects. • The estimation and reporting of the credit rating agencies was also very weak in the situation of Enron. it been subjected on the false information given by the company. The agencies appear to be least involved deeply in Enron financial statement details. As is it known to every specialist in the financial markets the responsibility of the credit rating agencies is to show a clear picture of the financial position of the company. Arthur Andersen was unsuccessful to make truthful judgement, just because of the weakness in the skilled and ethical values, which led to its failure and exit from the field of

More about The Main Reasons Behind The Enron Scandal

Open Document