The Truth About Enron's Collapse Essay

The Truth About Enron's Collapse Essay

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Approximately 10 years ago, the truth emerged about Enron, one of the largest and seemingly most successful energy companies in the world until it collapsed and declared bankruptcy. What happened at Enron was due primarily to the ethical climate in business at the time; however, accounting frauds such as Enron are not new.
This paper will examine the charismatic leadership from a well-educated man who received both his bachelor and master degree in economic from the University of Missouri and earned a Ph.D. in economics at the University of Houston. Who would have thought someone so educated would have needed help making smart decisions.
Mr. Kenneth Lay, Founder and Jeffrey Skilling, CEO of Enron and a few of their other colleagues allowed greed to cloud their judgment that later ended with charges against them of conspiracy and fraud. In this research we will prove how bad decision making, greed, and lack of self-control eventually lead to the destruction of an empire. This paper will show leaders that lack ethics and integrity will not be able to endure the test of times. Regardless of their intelligence and savvy personality if a leader is prone to unethical behavior they will eventually give in to their own destruction. Unethical behavior verses doing the right thing will never equal success.
Corrupt leadership created by senior management creates an immoral organizational culture and it promotes unethical behavior by the subordinates. These types of behaviors eventually lead to over 20,000 employees losing their jobs, health care and savings.

Problem Statement
Greed, arrogance, and accounting fraud were a matter of inadequate or misleading stockholder information by the organization prominent business e...

... middle of paper ...

...e Enron Corporation in December 2001 triggered two broad concerns: There may be more “Enron’s” out there, since many corporations share some of the characteristics that led to the Enron collapse. The unethical organizational culture at Enron has caused major burdens for the economy. This concern was reflected by a continued weakness in the stock markets and the foreign exchange of the dollar. This went well into the recovery from the 2001 recession, even though most of the subsequent economic news was better than expected.
The accounting scandals and bankruptcy by Enron and other major corporations have also undermined the popular and political support for free market policies. This effect has already led to increased federal regulation of accounting, auditing, and corporate governance and increased criticism of any proposal for reducing the role of government.

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