The American Dream typically involves working hard to build up an organization, maintaining it well, and reaping the benefits. This vision most certainly drove the formation of the energy powerhouse known as the Enron Corporation. The company began as two average sized organizations and within 15 years emerged as America’s seventh largest company. The organization employed close to 21,000 staff members with locations in over 40 nations around the world. Unfortunately, this success was decimated by numerous scandals involved with accounting practices. From lies of profits to questionable dealings, such as concealing debts, the parties involved with running the company had made some fatal errors. The end result left Enron without creditors and investors, leading to the firm to file for Chapter 11 bankruptcy (British Broadcasting Corporation, Enron Scandal at a Glance). The story of this once remarkable company is one that can be traced from the decisions made from its inception leading all the way to the much publicized trials that ensued.
Ethical behavior, in a general sense, is a definition of moral behavior in regards to lawfulness, societal standards, and things of that nature. In the business world, ethics commonly refer to acceptable and unacceptable business practices within the workplace, and all other related environments. The acceptance of colleges regardless of ethnicity, gender, and beliefs, as well as truthfulness and honesty in relation to finances within the company are examples of ideal ethical business conducts. Unethical business behavior would include manipulating procedures based on bias or discrimination, engaging in activities that promote political gain, as well as blatant fabrication of monetary factors within the company and “can affect organizational performance and is costly to employers, employees, shareholders, and other organizational stakeholders” (Cox 263). When a corporation practices proper ethics, it is representing not only itself in a positive manner, but its partners, shareholders, and clients as well. On the other hand, when an organization partakes in unethical activities, all parties are negatively affected. The collapse of Enron is a major case of unethical conduct in the corporate world, because the circumstances surrounding the firm’s chaotic plunge where so scandalous that it left “creditors wrangling over Enron's skeletal remains” (Helyar) long after the company had seen its demise. There are numerous instances to be mentioned, including deliberate failure to properly report fiscal losses, insider trading, and overall relentlessness. The inclusive purpose of this paper is to further explore the underlining factors that contributed to the downfall of the once powerful Enron, and how a new way of approaching business ethi...
Corporate fraud, greed, corruption, what company comes to mind when you hear those words? Enron! In this paper, we will take a look into the corporate facts and history as well as, stakeholder relationships, organizational trust issues, ethical leadership and ethical culture at Enron. As well as where improvements could have been made to improve organizational trust and ethical culture before Enron’s collapse.
The film Enron: The Smartest Guys in the Room was a great film loaded with examples of unethical behavior with Enron being an unethical corporate culture. The film portrays the rise and fall of Enron, one of the most corrupted corporations this country has seen. Enron had started off as a promising energy company with a vision to do good which quickly turned sour when top executives torn the company down while stealing millions of dollars from people. A reason for the downfall of Enron was the deregulation of electrical power markets which fueled the greed of Enron’s officials. They were the ones that transformed Enron from a traditional energy company into an energy broker.
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.
“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.
On the surface, the motives behind decisions and events leading to Enron’s downfall appear simple enough: individual and collective greed born in an atmosphere of market euphoria and corporate arrogance. Hardly anyone—the company, its employees, analysts or individual investors—wanted to believe the company was too good to be true. So, for a while, hardly anyone did. Many kept on buying the stock, the corporate mantra and the dream. In the meantime, the company made many high-risk deals, some of which were outside the company’s typical asset risk control process. Many went sour in the early months of 2001 as Enron’s stock price and debt rating imploded because of loss of investor and creditor trust. Methods the company used to disclose its complicated financial dealings were all wrong and downright deceptive. The company’s lack of accuracy in reporting its financial affairs, followed by financial restatements disclosing billions of dollars of omitted liabilities and losses, contributed to its downfall. The whole affair happened under the watchful eye of Arthur Andersen LLP, which kept a whole floor of auditors assigned at Enron year-round.
Enron was a Houston based energy, commodities and services company. When people hear the name Enron they automatically associate their name with one of the biggest accounting and ethical scandals known to date. The documentary, “Enron: The Smartest Guys in the Room,” provides an in depth examination of Enron and the Enron scandal. The film does a wonderful job of depicting the downfall of Enron and how the corporate culture and ethics were key to Enron’s fall. As the movie suggests, Enron is “not a story about numbers, it is a story about people.”
“Based on the never-before-published revelations of Sherron Watkins, the Enron Vice President who blew the whistle, POWER FAILURE is a gripping account of the greed, ambition, and arrogance that fueled Enron's rise--and the internal rivalries and financial chicanery that brought the company crashing down. In the late 1990s, Enron was hailed as the model company of the new economy.” (Power Failure: The Inside Story of How Enron's Culture of Arrogance and Greed Led to The biggest bankruptcy in American History, Author: Swartz, Mimi With: Watkins, Sherrin) Enron was a new economy company and is considered as one of the most innovative companies in the US. Ranked No. 7 before its bankruptcy, it expanded into a mega enterprise within a time span of only 15 years. The company filed for bankruptcy so that it can reorganize its operations while protected from the creditors. The company was accused of contributing business funds for political campaigning and to influence politicians through it, trying to influence the national energy policy, not paying Income Tax in the last four years despit...
Enron was the model for rapid growth in the 1990’s but part of the culture and ethics of Enron was disturbing. Falsified documents, cutthroat competitiveness among employees and accounting schemes that hid the truth of the company’s indebtedness were just a few examples of the lack of business ethics within the organization. Perhaps a more virtuous management team could have saved Enron from collapse.
2. The challenges faced were those of a changing workforce, competitiveness, and globalization, as well as ethics and social responsibility. While many companies were downsizing in the mid-1980s, Enron continued to grow and expand despite their lofty goals. They ventured out into foreign markets to be more competitive. The workforce also became more diverse and the characteristics changed. Employees during Enron’s tenor were less devoted to long-term career prospects; instead they were more interested in financial gain at any cost. Ethics seemed to be a secondary thought for most people during Enron’s time. To meet these challenges Enron executives had to make working for their company more attractive and lucrative.
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,
Enron was a company founded in the year 1985 based in Houston, USA. It was one of the world's largest energy trading and Distribution Company having an income of nearly hundred billion dollars during 2000 and was also regarded as America’s most Innovative companies for 6 consecutive years by the fortune magazine. In the last quarter of 2001, it was exposed that it’s declared financial condition was maintained significantly by systematized and skillfully premeditated accounting fraud, known thereafter as the Enron scandal. They hid major debts and did not book them in the balance sheet. The inflated figures in their balance sheet shot up their stock price to unprecedented levels, taking advantage of the situation executives with insider information traded in millions of dollars of Enron stocks. The senior executives and insiders were aware of the offshore accounts that were covering up losses for the Organization; the investors were kept in the dark. This sent across a domino effect which resulted in shareholders losing seventy four billion dollars, loss of hundreds of jobs and thousands of investors and employees losing their retirement accounts.
Ethics policies are implemented in almost all businesses. Companies search for candidates that will be moral in their actions so they can ensure long-term financial success. Throughout history we have seen businesses fall due to unethical behavior. In recent years the business Enron Corporation is best known for the scandal that led to the bankruptcy of a company with more than 60 billion dollars in assets. We will examine the circumstances that led to the downfall of Enron, how the scandal was realized, as well as the outcome of one of the largest bankruptcies in American history; a case that exemplifies unethical professional behavior.