The Enron Scandal is the bankruptcy of the Enrol Corporation, one of the America’s biggest company, that suddenly happened in 2001. This happened quite unexpected, as the company has officially expanded rapidly over the last decade, decimating its value and reaching the 7th position in the ranking of the most important US multinationals.
However, within a very short time, the Enron shares, all of them considered solid, lost all their value, ranging from $ 86 to 26 cents, burning around $ 60 billion in three months. The failure of Enron affected many workers because a proposal had been made for them to buy the shares of the company but they could not do anything to recover from the disaster.
The management of the company is obviously one of the main reason for the failure of Enron because they fooled the accounts. The first great lesson to be learned from what has happened is that the fake budget, which is already severe for unlisted companies, becomes for those listed, which can have devastating effects on the efficiency and functionality of financial markets. Then when the company started to loose, the top executives of the company, have had time to sell their shares before the crack, making huge profits.
Kenneth Lay, was the CEO of Enron Corporation and helped to develop this firm in one of largest companies of America. But he a big part of the worth of the firm was based on shady accounting practices and not recorded losses in the financial statement. In 2001 many