Causes Of The Enron Scandal

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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…show more content…
The executives tried to cover up their own failures when some of their business trading ventures started to perform poorly. The main aspect to the failure of Enron as a business was greed. The reason why this started was the moment when Jeff Skilling merged a mark to the accounting in Enron’s policy, which the system of the business had been taken advantage of. Over the 10 years the business was trying to generate new revenue streams to make the company prosperous as it was before. The streams of these revenues had been sustained through illegal dealings on the part of Enron and negotiations they did with other businesses. This scandal demonstrates the need of substantial reforms in corporate governance in the United States, and the ethical situation that should be dealt with in a business. Moreover, risk management failure that occurred in the Enron collapse is one of the outcomes where it does not accord with the company’s instability. The risks the Enron did to trade businesses, which they did not manage well and ended up destroying the firm. When the company does not have a correct alignment between the managements interests and the shareholders interest it could end up in chaos. The unethical behaviour of the company the structure was…show more content…
A manager in a business should understand what motivates an employee. To reward an employee helps the company achieve its objectives of the firm. According with Weinstein and Wild the reason board of directors of Enron did not have a way out to resolve the business management situation is due to the fact that the directors in Enron failed the risk management structure and was reliance on the information from business units example would be the responsible heads of Enron risk arising from inappropriate

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