Essay On Enron

Essay On Enron
Enron was the 7th greatest company in all over United States of America and the largest company that controlled electricity and gas in the world.
Enron became largest independent developers and producers of electricity in the world, serving both industrial and emerging markets. after expanding
the business and some more researches done on solar and wind energy, Enron became the largest supplier of this new energy over the world.
After reaching the pick of its business Enron started to have some difficulties at the late 1990's and the greatest scandal started on their stockholders
by hiding the results of the losses. And the scandal came to public after a failed merger with Dynegy Inc. in 2001.
Origins of the Enron Company
Enron's was known as Northern Gas Company in...show more content...
Beginning in 1991, Enron expanded it electricity business by building the first power plant in England, Teesside and become the largest plant built in
the world with about 1,875 megawatts. Subsequently, Enron built power plants in industrial and developing nations all over the world: Italy, Turkey,
Argentina, China, India, Brazil, Guatemala, Bolivia, Colombia, the Dominican Republic, the Philippines, and much more others in many countries. By
1996, the revenues of the Enron Company were from these worldwide projects and it was about 25 percent before counting the interest and taxes.
In 1994 the United States started and new way to consumes electricity and citizens were given the choice on how they want to use their gas or
electricity as they can choose the plan of electricity, Enron had a new market and fresh market by depending this new
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Essay on Overview of the Enron Scandal
Enron Corporation was an energy company founded in Omaha, Nebraska. The corporation chose Houston, Texas to home its headquarters and staffed
about 20,000 people. It was one of the largest natural gas and electricity providers in the United States, and even the world. In the 1990's, Enron was
widely considered a highly innovative, financially booming company, with shares trading at about $90 at their highest points. Little did the public
know, the success of the company was a gigantic lie, and possibly the largest example of white–collar crime in the history of business. The roots of the
lies start with former Enron CEO Kenneth Lay. This man helped bring together a number of smaller energy companies, namely InterNorth International
and...show more content...
All these factors lead to figures that were less than what Ken Lay promised, and even started posting losses by the second quarter of 1997. These
less than stellar numbers did not discourage company executives, and Enron continued to spend foolishly on advertisement and lobbying for
deregulation. All of the prior represents the business side of the downfall of Enron. That being said, businesses fail all of the time. The reason why
Enron Corporation and its executives will always live in infamy is not because the company failed, but how and why the company failed. How,
exactly, does a company worth about $70 million collapse in less than a month? It became clear that the company not only had financial problems, but
ethical problems that started from the top of the company and trickled down. A key player in these problems was Jeffrey Skilling. He was a man
brought to the company by Ken Lay himself. Skilling brought his own accounting concept to the company. It was called mark–to–market accounting.
This concept allowed Enron to record potential profits the day a deal was signed. This meant that the company could report whatever they "thought"
profits from the deal were going to be and count the number towards actual profits, even if no money actually came in. Mark–to–market accounting
granted Enron the power to report major profits to the public, even if they were little or even negative. It became a major way

Enron Essay
Integrative Case – The Downfall of Enron
Part I
1. Ken Lay served as CEO and chairman and Jeffrey Skilling also served as CEO. They both were responsible for planning, organizing, controlling
and leading the company. They set goals for the company and organized how they would be achieved. Kay's role was as the figurehead and the leader.
He also served as the spokesperson for the company and made many of the decision on the future of the company. As CEO's they both possessed
effective communication skills, where decisive, which was evidenced by their vision for the company and refusal to admit wrong even at the end, and
visionary. Throughout Lay's tenor the company continued to grow and prosper at a fast...show more content...
The downside to this approach was that these individuals were inexperienced and prone to taking large risks.
2. Enron employees were motivated by vanity and greed. Management used promotions, hefty raises and bonuses to motivate their employees. The
focus was placed on meeting financial needs. It was effective in motivating those who were extremely ambitious and did not have concerns for ethical
practices but put their focus on earnings and acquiring wealth.
3. Enron used a 360–degree feedback performance management system (PMS). Performance was directly linked to rewards. The system can be
beneficial to managers because it typically gives them a much wider range of performance–related feedback than traditional evaluation provides. The
disadvantage to this type of PMS is that if used inappropriately the focus can be placed on individual biases and politics. That is, if an employees peer
dislike them, the PMS can be used as a means to hurt that individual. Enron should have more closely managed their PMS so that its focus remained on
constructive rather than destructive criticism. Also, they could have removed the link between the PMS and rewards.
Part III – The Leadership
1. Lay and Skilling can be characterized as highly educated, extraverted, over achievers.

4 Ethical Issues with Enron Essay
There was a vast number of ethical issues raised in the movie "Enron–the Smartest Guys in the Room" but the four I am going to focus on are listed
below. Art Anderson, Ken Lay and all of the other executives did a number of unethical things which ultimately brought down Enron and affected
thousands of employees and their futures. The bottom line was that each and every one of them acted out of greed for the almighty dollar.
1– Encouraging employees to invest and buy stock in Enron when they knew the truth about the lack of value in the stock.
As an employee you trust in your management to make the best choices both for you and for the business to succeed. Ken Lay and other executives
strongly encouraged Enron employees to invest in...show more content...
One Merrill Lynch analyst began to question the numbers and profits that were being produced by Enron and eventually he was fired. Enron invested
a lot of money with Merrill Lynch and they didn't want Enron to stop investing so Merrill Lynch got rid of the employee who question Enron, when in
reality they should have listened to him. Merrill Lynch's decision not to listen to him showed other employees that they better keep quiet with their
opinions or their jobs would be on the line. If they listened to him they might have lost the deal with Enron, but in the end they lost it anyway and lost
millions along with it. Merrill Lynch's main focus should have been their employees and their investors, not solely Enron. They should have stuck to
their code of conduct and followed their values.
3– Manipulated earnings.
Enron executives and accountants cooked the books and lied about the financial state of the company. They manipulated the earnings and booked
revenue that never came in. This was encouraged by Ken Lay as long as the company was making money. Once word got out that they were disclosing
this information, their stock plummeted from $90 to $0.26 causing the corporation to file for bankruptcy.
This deception on behalf of the executives and others in the organization who hid this vastly affected anyone who had stock in Enron as well as stock
in other energy corporations. The

Enron Essay
As Bethany McLean and Peter Elkind portray in The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, there was a
chain–reaction of events and a hole that dug deeper with time in the life–span of, at one time the world's 7th largest corporation, Enron. The events
were formulated by an equation with many factors: arbitrary accounting practices, Wall Street's evolving nature and Enron's lack of successful business
plans combined with, what Jeff Skilling, CEO of Enron, believed was the most natural of human characteristics, greed. This formula resulted in fraud,
deceit, and ultimately the rise and fall of Enron.
Kenneth Lay created Enron in 1985 as a result of the merger of Houston Natural Gas and Internorth. Within a...show more content...
Next came California's rolling blackouts caused by Enron's traders. By turning the power off and on in California, they could control the price of
electricity, essentially stealing people's money. Because they could manipulate the price, they made hefty bets on it, and in turn made over $2 billion
dollars for Enron. Just before the fall of Enron, the insiders sold off nearly $1 billion dollars prior to the annunciation of the bankruptcy of Enron.
What caused so many executives and employees to behave in such a fraudulent way? As Skilling put it, the biggest motivator for humans is money.
Enron's executives received large quantities of stock options, motivating them to manipulate earnings which would cause an increase in the stock price.
The nature of Enron's executives also played a big role in influencing employees to display similar characteristics of aggression, arrogance, greed and
dishonesty. Executives at Enron were known to take extreme dirt–biking trips to places like Mexico, where they could dangerously travel 1200 miles of
rugged terrain. Stories of broken bones, stitches and flipping jeeps became legendary at Enron, and fed the macho personality of the employees. Top
management gave its managers blank orders, to "just do it" (60). In turn, employees attempted to not only crush outsiders, but eachother. Skilling
encouraged this behavior, saying "he wanted them to

Enron Essay
An Explanation of the Causes and Effects of the Enron Accounting Scandals
Name:Do Minh Tam
Class:MEP 100
Lecture:Karen Bird
Date:December 24, 2010
Introduction
Background
From the 1980s until now, there have been a lot of accounting scandals which were widely announced on by media. The result of this situation is many
companies were bankruptcy protection requests, and closing. One of the most widely reported emulation of accounting scandals is Enron Company.
Enron Corporation is one of the largest energy companies in the world. Enron was founded in Houston, Texas, America in July 1985 by the
consolidation between Houston Natural Gas and InterNorth of Omaha, Nebraska ("Enron and Enderson: The story", n.d.). According to...show more
content...
Endrew and his wife got benefits from Enron to buy Chewco where his wife is owner. He controlled subsidiary companies to buy stock and hid debt for
Enron. Enron did not follow the accounting rules. Every mistake in accounting needs to note and describes for shareholders know, and writes on the
financial statements. In 2001, Accountants cannot combine Chewco into the Enron's financial statement. This lead to misunderstanding report which
show the financial statement of Enron such as a decrease Enron income and an increase Enron's reported debt. In addition, Enron tried to make
maximize profits by break the law. Therefore, dishonesty in the financial statement, corruption and a lack of knowledge and skills of accountants are
the causes of the Enron's bankruptcy.
The Effects of Enron Accounting Scandal on
Employees and shareholders
When Enron was bankrupt, the most affected people are Enron's workers and shareholders. Many people lost their jobs, their whole pension and all of

the shareholders lost their money (Dunder,n.d.). According to Raver (2006, p4–5), Enron stocks prices were increased nearly double in one year by
many ways such as legal and illegal way. The stock price was increasing so fast, many Enron employees bought Enron stock as saving money, and also
their pension are in Enron's stock too. When Enron was failing, Enron's stock

Enron Case Study Essay
Enron Summery of Enron case The Enron scandal has far–reaching political and financial implications. In just 15 years, Enron grew from nowhere to
be America's seventh largest company, employing 21,000 staff in more than 40 countries. But the firm's success turned out to have involved an
elaborate scam. Enron lied about its profits and stands accused of a range of shady dealings, including concealing debts so they didn't show up in the
company's accounts. As the depth of the deception unfolded, investors and creditors retreated, forcing the firm into Chapter 11 bankruptcy in
December. More than six months after a criminal inquiry was announced, the guilty parties have still not been brought to justice. Leaders...show more
content...
The PRC was a powerful mechanism for preventing the emergence of subcultures running counter to the organizational tone set by Enron's hierarchy.
Members of the Risk Management and Assessment Group who reviewed the terms and conditions of deals (and who were largely inexperienced
recent MBA graduates) as well as internal auditors, were fearful of retaliation in the PRC from persons whose deals they were reviewing (Chaffin and
Fidler 2002; Dallas 2003). At best, control was compliance–based, seldom encouraging employees to follow either the letter or the intent of laws
(Dallas 2003). This punitive environment brought the consequences of dissent sharply into focus. Enron's culture has been characterized as "ruthless
and reckless ... lavish rewards on those who played the game, while persecuting those who raised objections" (Chaffin and Fidler 2002, 4–5). Led by
Skilling's cavalier attitude to rules, top management conveyed the impression that all that mattered was for employees to book profits. In sum, this led
to an erosion of employees' confidence in their own perceptions and, most crucially, to further compliance with the organization's leaders in a way that
strengthened conformist behavior. Former employees have noted how "loyalty required a sort of group think" (Chaffin and Fidler 2002, 2) and "that
you had to 'keep drinking the Enron water'" (Stephens and Behr 2002, 2). A myth of smooth, flawless operations was perpetuated

Enron Scandal Essay
The reason of Enron Corporation downfall for audit failure is conflict of interest and accounting fraud. This is because it has been suggested that
conflicts of interest and a lack of independent oversight of management by Enron's board contributed to the firm's collapse. Some have suggested that
Enron's compensation policies engendered a short–sighted focus on earnings growth and stock price. In addition, recent regulatory changes have
focused on enhancing the accounting and strengthening internal accounting and control systems. In these issues, it begin with Enron's board. The
conflict of interest between the two roles played by Arthur Andersen, as an auditor, he also as a consultant to Enron Corporation. While investigations
continue, Enron Corporation has sought to salvage its business by spinning off various assets. As that, Arthur Andersen actually has admitted some
...show more content...
It also help to understand the real meaning of Shareholder Wealth Maximization. Enron Corporation scandal also help to conceal the true of financial
statement and ensure that investor fund. When the time of Enron's collapse, it was the biggest corporate bankruptcy ever to hit the financial world. But
then WorldCom, Lehman Brothers and Washington Mutual have surpassed Enron as the largest corporate bankruptcies. TheEnron scandal drew
attention to accounting and corporate fraud, as its shareholders lost $74 billion in the four years leading up to its bankruptcy, and its employees lost
billions in pension benefits. The Sarbanes–Oxley Act has been called a "mirror image of Enron, the company's perceived corporate governance failings
are matched virtually point for point in the principal provisions of the Act." Increased regulation and oversight have been enacted to help prevent or
eliminate corporate scandals of Enron's

Essay on Ethics And Enron
ENRON
Introduction
Enron was the country's largest trader and marketer for electric and natural gas energy. Its core business was buying energy at a negotiated price and
later, selling the energy when prices increased. As an energy broker, Enron provided a service by allowing producers to negotiate a certain price
while Enron took the risk that prices would fall below what it bought energy. Buyers of energy also benefited because Enron could ensure the supply
of energy. In 2000 Enron was listed number five on the Fortune 500. What happened to the company which was among the most admired for vision and
quality thinking? Enron was the company that held virtual assets and not the real assets, such as power stations, which were capital...show more
content...
These promises changed the position of Merrill Lynch from equity to debt. But Enron showed it as cash income and did not show that amount was
really a loan to be repaid. Enron was not legally required to reflect any of its debt of the SPE (Bohlman, 2005).
World Com
Introduction
WorldCom, now named MCI, recently emerged from bankruptcy protection after reporting accounting irregularities of $11 billion. During the late
1990s there was formidable pressure on WorldCom to preserve historic levels of cash flow and EBIDTA (earnings before interest, depreciation, taxes,
and amortization) while new telecommunications orders were in decline as well as continued pressure on existing price points. It was during this
period that WorldCom began many of the fraudulent accounting practices. The SEC Report (2003) on WorldCom identified fraudulent behavior in
three main areas: the unauthorized movement of line costs to capital resulting in decreased expenses, the improper release of accruals reducing current
expenses, and questionable revenue entries producing an increase to earnings. These accounting irregularities have resulted in many of WorldCom's
previous executives being prosecuted on securities' charges. As part of emergence settlement, MCI paid the Securities and Exchange Commission
(SEC) fines totaling $750 million and former bondholders received 36 cents on the dollar in stock in the new company (Scharff, 2005).

Enron Case Study Essay
Globalization and Corporate Social Responsibility – Corporate Culture and Individual Responsibility
1. Based on Alex Gibney's film version of the rise and fall of Enron, do you accept Joel Bakan's argument that the corporation shows "psychopathic"
traits?
I agree with Joel Bakan, however, just partially about the corporation Enron showing 'psychopathic' traits. Yes there are traits that they were doing
unethical actions that completely ruin many people life–long works and their lives; nonetheless, in my opinion, those actions were intentional. The
executives at Enron were gambling intelligently, according to the movie, and take a risk so big that it was over their heads at the end, making it an
absolute failure. The psychopathic...show more content...
At some point, Enron executives use the deregulation of Californian energy market to raise the price of electricity, getting other company to join in
action and make skyhigh profits. At the end, all these illegal, unethical actions they had done snowballed and they could not stop because once they
could not hide their debts, and government institutes started to suspect, they are left with nothing to protect themselves. They took a high risk road to
profit, followed a strategy of 'win at all cost' so it will later come back at them. Throughout company's history, its culture had been an unethical one,
with staffs from executives to accountants to associated firms having joined in their strategies and performed underhand actions. The environment was
set for them to success in their scams because they brought in people and company having the same mind set. As for personal values, they executives
only cared about themselves and whoever on their side. The financial executive, like Fastow even stole money from the company for himself and it
was 40 million dollars. They pocketed millions of dollars so they did not pay much attention to what would happen to their employees once this scam
was taken out of the dark. After Enron bankrupted, their employees had nothing in return, not even pension money and shareholders, with the stock
price of the company being lower than a sing dollar, lost everything. In conclusion, what happened at

Enron Essay
ENRON In 2000 Enron was the world's leading corporation in selling natural gas with an estimated worth in sales of around one hundred billion
dollars and the company showed only signs of progressing. Within one year the company went completely bankrupt and forty of their top employees
were arrested or are in jail awaiting trials. How can a multinational corporation with steadily increasing revenue take such a drastic fall into bankruptcy
and how did no one see this coming? In the end Enron knew exactly what was in their future and hid it from the public by allocating their debt and with
a loophole in their accounting, it turned out to be one of the biggest cover ups in the stock markets history. In 1985 Houston Natural Gas merged...show
more content...
Enron's greatest tool for concealing their debt and in the end was their ultimate demise was called "mark to market accounting" (oppel). "Mark to
Market Accounting" is not totally illegal if it is done correctly which is acknowledging future sales and revenue with a new operation or business
venture. What the Enron executives did was when a new natural gas plant was still in production they would predict that their new plant will
generate them one hundred million dollars over the next ten years. However instead of just using this number as a future goal they would register
this as revenue for that year. This would greatly increase their numbers and allow their stock to rise and profits to be divided among the top
executives. To the outside world Enron appeared to be very successful and a great investment when in fact they were digging their own graves.
Enron's stock and reports annually improved without ever having debt. These great figures started to arise some questions of doubt of all of their
success. With these questions people started to look into their books and analyzing all of their data in the reports to try and find some mistakes, and it
did not take very long to do so. Government Accountants started to realize that their numbers did not add up to their profits and looked into the
explanation of where the missing numbers went (Berenson). Like a house of cards, Enron crumbled to the ground. Enron immediately went into a
crises mode

Essay On Enron

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