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Enron and business ethics
Enron and business ethics
The ethical concerns of enron
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An Evaluation of Ethics and the Ethical Culture of Enron. This article provides a brief background on the event leading to the demise of Enron. Additionally, this paper will discuss the cultural elements of Enron and their relationship to unethical behavior and its effects on stakeholders. Lastly, this paper offers an analysis of ethic theory and its application to the Enron Dilemma. Introduction and Situational Analysis Enron, once revered as juggernaut in corporate America, fought its way to top of the industrial world. In 1985, while climbing the ladder of success, Enron began its energy industry merger with two Houston companies (Sims, 2003, p. 243). Following the merger in 1998, the massive empire known as Enron solidified its powerhouse …show more content…
Placed in proper perspective, had Enron considered doing the right thing because it was the right thing to do, regardless of outcome, the company may still be in business today (Gilbert, 2012, p. 57). Obviously, in hindsight, doing the right thing may have changed the culture to one more conducive to moral values, which in turn, may have resulted in earlier reports of financial shortcomings. In reality, the company may have prevented its own demise with honest forthcoming reports that could have prevented market panic; thus, preventing the downward spiral that enviable destroyed the company. Point of fact, Enron openly espoused its affection for ethical policies but, in fact, it did not practice ethical behavior. Truly, had the company followed any ethical approach, it may have staved off its preordained destiny. A culture that rewards breaking rules is destine for failure. Though an ethical program may appear to be the solution; however, a moral culture is truly the key to winning the battle of ethics. Moreover, others have suggested that ethical programs may stifle creativity and thus prevent the free exercise of one’s values and moral judgment (Stansbury & Barry, 2007, p. 239). While a program by itself will never be successfully, leadership from the top is instrumental to victory; managers must be known for possessing core values such as honesty and integrity (Nel, Nel, & du Plessis, 2011, p. 59). Albeit, despite the best policies, the proclivities of most subordinates will always drift towards follow the examples of leadership (Mayer, Kuenzi, & Greenbaum, 2010, p. 13). Thus, like the saying goes, an ounce of example is worth a thousand words! The prevention of such needless tragedy lies not in policy or programs but rather in leadership by example. If society truly demands moral behavior within its institutions, then it must expect the same standard from its leaders. Society must demand
...FO at the Houston airport. While Mr. Fastow's parents were undergoing a random search, he stopped to chat with Mr. Schwieger. "I never got an opportunity to explain the partnerships to you," he said, according to Mr. Schwieger. Mr. Schwieger replied, "With everything that has come to light, I probably wouldn't like the answer I would have gotten."
The Enron Corporation was founded in 1985 out of Houston Texas and was one of the world 's major electricity, natural gas, communications, and pulp and paper companies that employed over 20,000 employees. This paper will address some of the ethical issues that plagued Enron and eventually led to its fall.
Many organizations have been destroyed or heavily damaged financially and took a hit in terms of reputation, for example, Enron. The word Ethics is derived from a Greek word called Ethos, meaning “The character or values particular to a specific person, people, culture or movement” (The American Heritage Dictionary, 2007, p. 295). Ethics has always played and will continue to play a huge role within the corporate world. Ethics is one of the important topics that are debated at lengths without reaching a conclusion, since there isn’t a right or wrong answer. It’s basically depends on how each individual perceives a particular situation. Over the past few years we have seen very poor unethical business practices by companies like Enron, which has affected many stakeholders. Poor unethical practices affect the society in many ways; employees lose their job, investors lose their money, and the country’s economy gets affected. This leads to people start losing confidence in the economy and the organizations that are being run by the so-called “educated” top executives that had one goal in their minds, personal gain. When Enron entered the scene in the mid-1980s, it was little more than a stodgy energy distribution system. Ten years later, it was a multi-billion dollar corporation, considered the poster child of the “new economy” for its willingness to use technology and the Internet in managing energy. Fifteen years later, the company is filing for bankruptcy on the heels of a massive financial collapse, likely the largest in corporate America’s history. As this paper is being written, the scope of Enron collapse is still being researched, poked and prodded. It will take years to determine what, exactly; the impact of the demise of this energy giant will be both on the industry and the
the social world of Enron. The fact that they took the form they did and to such a pronounced degree are certainly troubling and perhaps surprising. What should not be surprising is the role such ritualization processes played in the development of this type of deviance, given recognition of their importance in social relationships and organizations.
Ethical behavior is behavior that a person considers to be appropriate. A person’s moral principals are shaped from birth, and developed overtime throughout the person’s life. There are many factors that can influence what a person believes whats is right, or what is wrong. Some factors are a person’s family, religious beliefs, culture, and experiences. In business it is of great importance for an employee to understand how to act ethically to prevent a company from being sued, and receiving criticism from the public while bringing in profits for the company. (Mallor, Barnes, Bowers, & Langvardt, 2010) Business ethics is when ethical behavior is applied in an business environment, or by a business. There are many situations that can arise in which a person is experiencing an ethical dilemma. They have to choose between standing by their own personal ethical standards or to comply with their companies ethical standards. In some instances some have to choose whether to serve their own personal interests, or the interest of the company. In this essay I will be examining the financial events surrounding Bernie Madoff, and the events surrounding Enron.
Investors and the media once considered Enron to be the company of the future. The company had detailed code of ethics and powerful front men like Kenneth Lay, who is the son of a Baptist minister and whose own son was studying to enter the ministry (Flynt 1). Unfortunately the Enron board waived the company’s own ethic code requirements to allow the company’s Chief Financial Officer to serve as a general partner for the partnership that Enron was using as a conduit for much of its business. They also allowed discrepancies of millions of dollars. It was not until whistleblower Sherron S. Watkins stepped forward that the deceit began to unravel. Enron finally declared bankruptcy on December 2, 2001, leaving employees with out jobs or money.
Enron Corporation started back in 1985. It was created as a merger of Houston Natural Gas and Omaha based InterNorth as a interstate pipeline company (CbcNews). Kenneth Lay was the former chief executive officer of Houston natural gas merged his company with another natural gas line company, Omaha Based InterNorth. During the time of the merger there were many arguments amongst the two companies and in the end Ken Lay the former C...
The film, “Enron: The Smartest Guys in the Room” highlighted a plethora of unethical behavior. From the start, Kenneth Lay was determined to turn a profit and only surrounded himself with individuals who were equally determined. Kenneth Lay, CEO, made numerous decisions on with poor ethical conduct. When faced with debt, Lay encouraged employees and traders to do what was needed to produce a profit. This poor leadership paved the way for poor decision making by all involved.
Several electric companies and gas companies that Enron owned went bankrupt and lost everything the employees worked for (Thomas, 2002). Even though these individuals were impacted directly, several governing bodies were impacted as well. The Securities and Exchange Commission and Congress changed their perspective on how they would monitor companies and evaluate their gains in order to not mislead the public of what their actual worth was (Thomas, 2002).In order for these entities to do a better, more accurate job, additional monitoring services became mandated where rules and guidelines were lenient. Enron rose to prominence in the late 1980’s and early 1990’s (Bragg, 2002).
Enron Corporation was based in Houston, Texas and participated in the wholesale exchange of American energy and commodities (ex. electricity and natural gas). Enron found itself in the middle of a very public accounting fraud scandal in the early 2000s. The corruption of Enron’s CFO and top executives bring to question their ethics and ethical culture of the company. Additionally, examining Enron ethics, their organization culture, will help to determine how their criminal acts could have been prevented.
Thomas, C.W. (April, 2002). The rise and fall of enron. When a company looks too good to be true, it usually is. Journal of Accountancy, Retrieved June 15, 2011, from http://www.journalofaccountancy.com/Issues/2002/Apr/TheRiseAndFallOfEnron.htm
“When a company called Enron… ascends to the number seven spot on the Fortune 500 and then collapses in weeks into a smoking ruin, its stock worth pennies, its CEO, a confidante of presidents, more or less evaporated, there must be lessons in there somewhere.” - Daniel Henninger.
The main ethical issue with the Enron scandal is that Enron allowed legal loopholes to supersede ethical principles (Bowen & Heath, 2005). Enron used legal principles to justify what they were doing instead of acknowledging that the accounting processes they were using were unethical. Another one of the ethical issues is that Enron faced was that
The Enron Corporation was an American energy company that provided natural gas, electricity, and communications to its customers both wholesale and retail globally and in the northwestern United States (Ferrell, et al, 2013). Top executives, prestigious law firms, trusted accounting firms, the largest banks in the finance industry, the board of directors, and other high powered people, all played a part in the biggest most popular scandal that shook the faith of the American people in big business and the stock market with the demise of one of the top Fortune 500 companies that made billions of dollars through illegal and unethical gains (Ferrell, et al, 2013). Many shareholders, employees, and investors lost their entire life savings, investments,
When an ethical dilemma arises within an organization, it is difficult to separate right and wrong with what is best for the majority. Sometimes the answer is not a simple “yes” or “no.” In 2002, Enron Corporation shows us just that. By 2002, the sixth-largest corporation in America filed for Chapter 11 bankruptcy. The case of the Enron scandal is one of the best examples of corporate greed and fraud in America.