Corporate Governance Of The Enron Scandal Essay

Corporate Governance Of The Enron Scandal Essay

Length: 1036 words (3 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview


In the Enron scandal there have been many failures and the outcome to this is a practical standpoint which included a moral hazard in the company where managers where elaborating and not managing the companies risks. Take in to account the risks that had not been managed properly to certain extent in the company. Anglo-American system of corporate governance is centered as the ownership of an establishment and it is extensively circulated between the differences in shareholders than the ownership of being focused on the Sarbanes Oxley Act of 2002.
Anglo-American corporate governance is a primary aim of maximizing the shareholders value, which improves the access of savers on firms to make investments opportunities. As a company Enron was seen as the archetypal business that managed shareholders values. The reason for this is the collapse was likely to resonate because of the concerns of effects and the dominance of ‘shareholders value’ norm in the Anglo-American corporate governance. It was attributed that the failure to Enron was the elements of fraud being underpinned in the company 's collapse. The dominant policy response to the collapse is that Enron was mostly focused on the corporate governance issues. The main results of Sarbanes Oxley Act 2002 and the Higgs review shows that the Enron’s failures brought to attention as to the lack of oversight from the board directors, managers were required to promote the success of the company for the benefit of the shareholders. They comply with their duties if they increase the banks risk profile at the cost of the final no-adjusting creditor the state.



The board directors had to oversee corporate management as a purpose of protecting its interests of shareholders, Enron board wai...


... middle of paper ...


...ndards.
Take into account on regards to the actions of the company executives, the reason because of the companies’ structure whether the business is ethically comprehensive. Analyzing of the business it has detected unethical acts to Enron’s collapse. The true lesson of Enron is that until the power of the shareholder value
norm is broken, effective reform of corporate governance will be on hold. But while there may well have been fraud at Enron, and conflicts of interest, these were not the sole or even the principal reason for the company’s collapse. Instead, Enron appears to have been a case of mismanagement of corporate risk. Enron collapsed because of a systemic failure in which the company’s business plan and its accounting policy were implicated. The company’s managers pursued a strategy of minimizing its fixed costs with the aim of boosting its share price.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Corporate Governance : The Relationship Between Shareholders, Management And The Board Of Directors

- Corporate governance refers to the relationship between shareholders, management and the board of directors of a corporation and how each of these participants influence the direction and performance of the corporation. The governance of a corporation directly relates to how that company will operate and whether that company will be successful. Corporations that operate using sound, moral corporate governance lay the groundwork for a corporation that has integrity and efficiency in financial markets....   [tags: Corporate governance, Corporation]

Better Essays
1228 words (3.5 pages)

Enron Scandals Involving Unethical Corporate Governance Practices Essay

- Between the years 2000 and 2002 there were over a dozen corporate scandals involving unethical corporate governance practices. The allegations ranged from faulty revenue reporting and falsifying financial records, to the shredding and destruction of financial documents (Patsuris, 2002). Most notably, are the cases involving Enron and Arthur Andersen. The allegations of the Enron scandal went public in October 2001. They included, hiding debt and boosting profits to the tune of more than one billion dollars....   [tags: Business ethics, Enron, Ethics]

Better Essays
1096 words (3.1 pages)

Enron : Enron And Enron Essay examples

- Prior to 2000, Enron was an American energy, commodities and service international company. Enron claimed that revenue is more than 102 millions (Healy & Palepu 2003, p.6). Fortune named Enron “American most innovative company” for six consecutive years (Ehrenberg 2011, paragraph 3). That is the reason why Enron became an admired company before 2000. Unfortunately, most of the net income for the years 1997-2000 is overstated because of unethical accounting errors (Benston & Hartgraves 2002, p. 105)....   [tags: Enron, Enron scandal, Arthur Andersen, Audit]

Better Essays
1519 words (4.3 pages)

Enron Corporation : An American Energy Company Essay

- 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)....   [tags: Enron, Business ethics, Ethics]

Better Essays
1339 words (3.8 pages)

Internal And External Factors That Hinder Future Development Of Effective Corporate Governance

- ... While the reasons for company lapses are varied some as result of greed among owners or the need to maximize shareholder revenues, poor corporate governance is usually at the heart of the problem. One of the reasons is because corporate governance entails harmonizing the interests of the corporation and those of the stakeholders some of whom include shareholders, management, customers, suppliers, community, financial institutions, and the government (Eweje & Perry 2011, p. 226). Due to poor corporate governance, some companies engage in unethical means to achieve those interest....   [tags: Corporate governance, Corporation]

Better Essays
969 words (2.8 pages)

Enron Was An American Energy And Service Company Essay example

- ... Whereas, with mark to market accounting, a company is valued by their present and future potential transactions. Enron abused this system, by recording profits from recently signed contracts and recently built factories, that were actually not returning profit yet. In addition, to falsifying their accounts, Enron’s CFO Andy Fastow created special purpose entities to hide Enron’s failures. These were many companies who would buy Enron’s liabilities and debt thus removing them from Enron’s books....   [tags: Enron, Jeffrey Skilling, Enron scandal]

Better Essays
1189 words (3.4 pages)

Questions and Answers About the Enron Scandal Essay examples

- The Enron scandal Question 1: What happened to Lay, Skilling and Fastow. Kenneth Lay created in 1985 after assimilation InterNorth and Houston Natural Gas . Later, he employed the likes of Jeffrey Skilling and Andrew Fastow, who were to be involved with him in committing gross accounting misconducts. Together with these men and many others, Lay hid huge sums of cash in debt from unsuccessful contracts and plans. This was possible through the use accounting loopholes, poor financial reporting and special purpose entities....   [tags: accounting, reforms, finances]

Better Essays
784 words (2.2 pages)

Ethical Accounting Failure: The Enron Scandal Essay

- According to Croxford” Ethical accounting failure has continued to occur in multinational companies in spite of the increased legislation, enhanced corporate governance programs, and greater attention on business ethics by the academic community.” (Croxford, 2010) According to his research, (Croxford, 2010) believed “that accounting professional was discriminated against based on their age, culture, gender, and education.” Multinational corporations have been facing ethical failures scandals for many years....   [tags: audit, quality control, detection of fraud]

Better Essays
1192 words (3.4 pages)

Research on the Importance of Corporate Governance Essay

- Context and Background One of the foremost objectives of any business is profit maximization; each and every organization wants to run a profitable and sustainable business activity alongside satisfying the needs of its customers. It wants to set a mark, and be differentiated amongst its competitors whilst increasing its market share value. However in regards to the prospects of profit maximization, every business must ensure that it adheres to a strict code of conduct, enforce internal controls and abide by set rules and regulations....   [tags: business, profit, standards]

Better Essays
2029 words (5.8 pages)

corporate governance Essay examples

- Corporate governance is a very poorly defined concept; it covers so many different economic issues. It is difficult to give a first class definition in one sentence. Corporate governance has succeeded in attracting a great deal of interests of the public because of its obvious importance for the economic health of corporations and society in general. As a result, different people have come up with different definitions that basically mirror their special interest in the field. It is difficult to see that this 'disorder' will be any different in the future so the best way to define the concept is perhaps to list a few of the different definitions rather than just mentioning one definition....   [tags: essays research papers]

Better Essays
942 words (2.7 pages)