The Rise And Fall Of Enron Essay - 860 Words

The Rise and Fall of Enron The objective of every company is to maximize profit, become a big player and remain viable. Enron was no exception the key players at the time were Kenneth Lay CEO, Jeffery Skilling who was hired by Lay in 1990 to head the Enron Finance Corporation and by 1997 Skilling was made President and Chief Operating Officer. Andrew Fastow, CFO who was the chief financial officer of Enron. Enron merged Houston Natural Gas in 1985 with another natural gas pipeline to create Enron. The intent from the beginning was to expand beyond just selling and transporting gas. The company was moving toward the newly deregulated markets. The deregulated markets were not governmental control. The company moved toward†¦show more content†¦New partnerships were created for Enron in order to separate Enron’s debts from their assets. In the simplicity of the accounting equation, assets equal liabilities plus owner equity, the company could show assets almost totally free of liability. This made Enron one of the most prominent companies to work for. Enron was listed in the fortune 500 club and was in the top 100. Its shares listed as blue chip stock. In 2001, Arthur Anderson the big accounting firm announced that some of these partnership debts should have been disclosed in the financial statements of Enron. This forced Enron to report losses above $1 billion. The SEC investigated Enron and Fastow was replaced. Enron drew a $3 billion dollar line of credit and began to pay off its outstanding debt, but this was not enough. In 2001, Enron disclose that it would sustain losses for around $1 billion and would reinstate its financial outcome for the years of 1997, 1998, 1999, 2000 and for year of 2001 the first two quarters, to make right the errors that puffed up Enron $591 million net income. The shock of this summary was massive as Enron dropped 91% in stock. Over 4,000 employees were laid off at Enron during the time in which the SEC was investigating and Enron f iling bankruptcy. In December 2001, when congress was investigating Enron, the company declined two congressional hearings. It was realized that most of the company’sShow MoreRelatedThe Rise And Fall Of Enron1008 Words   |  5 PagesIntroduction Enron began as an energy company in 1985. After the deregulation of oil and gas in the U.S., Enron lost its’ exclusive rights to natural gas pipelines. The CEO, Kenneth Lay then hired a consulting firm to reinvent the company in order to make up lost profits. He hired Jeffery Skilling, who was in banking, specifically; asset and liability management. Under the topic â€Å"The Beginning Presages the End†, C. William Thomas (2002) writes: â€Å"Thanks to the young consultant, the company createdRead MoreThe Rise And Fall Of Enron1900 Words   |  8 PagesThe Rise and Fall of Enron One of the most basic tenets of all companies, whether small or large, is to create a principled corporate culture. Those ethical principles must start with the executives of the organization and trickle down to the individual employees. Leaders affect the employees’ decision-making process, yet they tend to adopt the same rationale as their leaders when reaching a decision. The leadership of a company needs to find a balance between risk and creating opportunity. WhileRead MoreThe Rise and Fall of Enron2970 Words   |  12 PagesThe Leadership of Kenneth Lay 5 Contributing Factors for Enron’s Debacle 7 Power Abuse 7 Fraudulent Accounting Practices 7 Employees and Board members 8 Investors Grief 9 Auditors and external regulatory agency 9 Conclusion 9 The debacle of Enron, led not only the company to bankruptcy but also its employees and shareholders. Unethical leadership and vested interests played a significant role in its imminent failure. Very few had the courage to challenge authority and leave when faced withRead MoreThe Rise and Fall of Enron1170 Words   |  5 PagesThe Enron Corporation was founded in 1985 by Kenneth Lay and based in Houston, Texas. Enron was known as one of the world’s leading electricity, natural gas, communications and pulp and paper companies. By the late 1990s Enron was considered one of the country’s most groundbreaking companies constructing power plants, gas lines, buying and selling electricity and gas, and partaking in a unique trading business; creating whole new markets for oddball commodities. In 1995 annual revenues were aroundRead MoreThe Rise and Fall of Enron1532 Words   |  6 PagesMost of the world has heard of Enron, the American, mega-energy company that â€Å"coo ked their books† ( ) and cost their investors billions of dollars in lost earnings and retirement funds. While much of the controversy surrounding the Enron scandal focused on the losses of investors, unethical practices of executives and questionable accounting tactics, there were many others within close proximity to the turmoil. It begs the question- who was really at fault and what has been done to prevent it fromRead MoreRise and Fall of Enron Essay872 Words   |  4 PagesThe rise and fall of Enron is a company that was lead to its own demise by it’s own leadership and ill business decisions. The motivational theories explained from the readings of Organization Behavior can correlate with the failure of Enron’s internal organization. Even though a company may appear to display successful business practices, the influence of leadership through management can ultimately lead the company to fail. Enron’s code of ethics prided itself on four key values; respect, integrityRead MoreThe Rise and Fall of Energy Giant, Enron Essay1540 Words   |  7 PagesThe Rise and fall of energy giant ‘ENRON’ Introduction: The main aim of this essay is to analyse business ethics in the context of the Enron scandal. Enron scandal became notorious for violating ethical standards. There are several business motives involved in the rise and fall of Enron. In today’s world, adopting ethical standards is a must for a company to protect shareholder’s interest. Even though the rules of playing business are obvious, still several companies adopt short cut mechanismsRead MoreThe Smartest Guys At The Room : The Amazing Rise And Scandalous Fall Of Enron1654 Words   |  7 PagesSmartest Guys In the Room† the amazing rise and scandalous fall of Enron goes into great detail of what happens when a company has no ethics. It could be said that ethics was the last thing on the minds of the executives that worked at Enron. People employed at Enron cared about two things the stock price of the company, and the money they could put in their own pockets. This was what caused the fall of one of the biggest energy companies in the U.S†¦ Enron failing did not happen overnight it tookRead MoreWhat I Learned from Studying the Rise and Fall of Enron693 Words   |  3 Pagestolerated and can lead to the fall of anything from a small mom and pop business to massive a Corporation. That is exactly what happened to the Enron Corporation back in 2001. In this essay I will discuss what exactly Enron is, the unethical business practices that occurred, and my opinion on the scandal and how I would have handled the situation. I will have help accomplishing this with quotes from other credible sources. Honestly, I didn’t know what exactly Enron was before this assignment. OfRead MoreThe rise of Enron took ten years, and the fall only took twenty days. Enron’s fall cost its1600 Words   |  7 PagesThe rise of Enron took ten years, and the fall only took twenty days. Enron’s fall cost its investors $35,948,344,993.501, and forced the government to intervene by passing the Sarbanes-Oxley Act (SOX) 2 in 2002. SOX was put in place as a safeguard against fraud by making executives personally responsible for any fraudulent activity, as well as making audits and financial checks more frequent and rigorous. As a result, SOX allows investors to feel more at ease, knowing that it is highly unlikely