Fall of Enron - 1160 Words

The Fall of Enron 1. Why was Enron such an admired company prior to 2000? What innovation do they bring to the table? Be specific and support your statement with concrete information. Prior to the year 2000, Enron Company, established in the mid-80s, caused the admiration worldwide because of its fast rise of revenue both in the local and international stock market in a short period of time. Enron’s operating income in the year 2000 was stated in $100.7 billion and its after-tax net income was reported in $979 million (Palepu Healy, 2013). The enterprise’s business model was based on energy-trading, centered in the deregulated energy marketplace, and in its significant investments in several large-scale commodities and other broad†¦show more content†¦b. Firm governance? c. Incentive system? d. Conflict of interest between different parties? e. And†¦? In the accounting area, Enron failure was due to an intentional distortion of its financial statements to the affected groups, the stockholders and the overall population in general (Thomas, 2002). The commercial business displayed that they had made many partnerships with other firms and utilized them to cover its debts. There was no need to do fraudulent reports, unless there was an underlying bad intention of damaging the image and reputation of the organization. Revealing a dishonorable statement of a company’s financial state will be forever an unsafe judgment to make. Regarding to the firm governance area, the real critical origin of the Enron’s downfall was its business corporate behavior also named as governance behavior (Ackman, 2002). It is very well-known that every industry has a goal, which goes in alignment with its vision and mission. These should be their leading force in performing resolutions that are fair and just for their long-term viability and equilibrium. Additionally, all businesses also have their obligations not only to their board members but also have to transmit the correct service to their staff which includes their investors, employees, shareholders, and to the overall public in general. Whatever institution that depends on deeply in making revenues through unethical transactions and investments without truthfulness and withoutShow MoreRelatedThe Fall of Enron1146 Words   |  5 PagesCase: The Fall of Enron 1. Why was Enron such an admired company prior to 2000? What innovation do they bring to the table? Be specific and support your statement with concrete information. Enron was an admired company prior to 2000 because at that time it surfaced as a frontrunner in the deregulated energy market, making it possible to sell energy at higher prices, thus significantly increasing its revenue. The company, through efficient management team, has built leading businesses in energyRead MoreEssay on THE FALL OF ENRON727 Words   |  3 PagesThe Fall of Enron The History Enron began as a pipeline company in Houston in 1985. It profited by promising to deliver so many cubic feet to a particular utility or business on a particular day at a market price. That change with the deregulation of electrical power markets, a change due in part to lobbying from senior Enron officials. Under the direction of former Chairman Kenneth L. Lay, Enron expanded into an energy broker, trading electricity and other commodities. The Business of Enron EnronRead 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. 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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 Enron Essay860 Words   |  4 PagesThe 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 pipelineRead MoreFall of Enron Essay1430 Words   |  6 PagesQ1- Who were the key stakeholders involved in, or affected by the collapse of Enron? How and to what degree were they hurt or helped by the actions of Enron management? Ans- The key stakeholders affected by the collapse of Enron were its employees and retirees. Stakeholders and mutual funds investors lost $ 70billion market value. Banks were also affected by the meltdown of the company. They included big banks like J P Morgan Chase and Citigroup. Not only the stakeholder and bondholder lose outRead 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, integrity