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The Enron Scandal Scandal

Good Essays
Enron Scandal Extra Credit Enron Corporation was a company founded in 1985 when InnerNorth and Houston Natural Gas Company merged. Enron marketed natural gas, electricity and broadband. According to “Enron: The Smartest Guys in the Room”, Enron was once on Forbes where they were named “America’s Most Innovative Company,” for six consecutive years. Enron was a company that kept growing but no one wonder how. At one point their stock was worth $90.75, but they filed for bankruptcy which caused the stock to drop to $0.67. Soon they were removed from the stock market were employees lost millions of dollars in stocks and their 401k. At one point the stock was frozen where no one could buy and sell their stock to at least retain some funds. Some…show more content…
Lay and many other high executives caused the company and employees to lose millions. Jeffery Skilling played a major role in the Enron scandal which included, fraud, inside trading and mark-to-market accounting. Jeffrey was not focused on raising intrinsic value, he did want to increase the value but only so it would benefit him. Instead of doing it the legal way he may up values and it increased stock value. He knew the company was not making any money but he owned so much stock, he would lose everything if he reported the true earnings and book value. Instead he looked out for his best interests and the other high end executives. “Enron paid the top 140 executives $680 million in 2001. Kenneth Lay received $67.4 million and Jeffrey Skilling received $41.8 million” (Enron Fast Facts). The conflict-of-interest Andrew Fastow took place in were the financial statements more of the off-the-books partnerships. Fastow was able to make to make debts of the company appear debt free and show they were constantly making money. He was also created a web of companies that showed partnerships with Enron which did not exist. “By moving assets and liabilities off its books, Enron was able to inflate its profit and credit rating” (CFO’s Deals Detailed by Enron). Companies can play close attention to and need to understand balance sheets. They need to understand the practice of the company, law and whether partnerships
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