Case Study : Financial Reporting Misconduct

972 Words4 Pages
CEO Kenneth Lay’s ambition for ENRON a company he had helped form went beyond the business of piping gas. Enron went to become the largest natural gas merchant in North America and the United Kingdom. But the reality is, this company business model never worked. This was a company that was so desperate to win Wall Street 's respect that it kept it stocks shares prices going up despite the losses it was incurring in order for executives to keep lining their own pockets. Over the course of this Case Assignment, I will identify the examples of financial reporting misconduct, I will explain the deontological as well as a utilitarian ethical perspective and lastly I will identify the stakeholders likely to be affected by that misconduct. Enron was established in July 1985 when Houston Natural Gas merged with Omaha-based InterNorth, out of Houston, Texas. “In the late 1980s, Energy Corporation’s lobbied Washington to deregulate the business, companies including Enron said the extra competition would benefit both companies and consumers.”(BBC NEWS, 2002). From the beginning Kenneth Lay’s heart was filled with greed in April of 1987only two years after the merger “The board (including founder Kenneth Lay) learned that Louis Borget and Tom Mastroeni, the men in charge of the Valhalla operation, were gambling beyond their limits, destroying trading reports, keeping two sets of books and manipulating accounting in order to give the appearance that Valhalla was earning steady profits. But the board decides to not fire the Valhalla executives because Lay makes it clear that they are making too much money to let them go.” (PBS-Independentlens, (n.d.)). In June of 1990 Jeff Skilling, joins Enron as the Chief Executive, by the year 2000, E... ... middle of paper ... ...g their shares while the price was still high, the employees were left to lose it all as Enron imploded, by November the stock valued at an astonishing 26 cents a share. The company filed for bankruptcy protection on December 2 and the day after Enron fired 5,000 workers, one quarter of its 21,000 employees. Laid-off workers received a measly $4,500 severance payment; no matter how many years they had worked for the company they lost their 401(k) pension plan, health, and medical insurance. In summary, ethical theories need to be examined and measured need to be taken to incorporate them. Enron ignored its ethical code of conduct, self-interest influenced management in an unethical manner, and the stakeholders where the ones that felt the pain as Enron crumple. Enron is now known as the greatest company scandal in the US history and has become a symbol of corruption.

More about Case Study : Financial Reporting Misconduct

Open Document