...Enron: Opportunity for Corruption It could be argued that the majority of Enron employees knew that something was not right with the company. So much money was being made yet there was no solid evidence on how that money was being made. The Enron financial scandal that swept the nation was the primary result of a company with too much free will. The purpose of this paper is to show with evidence from the Enron case how no government regulation on companies can lead to humans making unethical choices based on greed and ambition. Enron executives initially applied for and were granted deregulation by the government. This allowed Enron executives to portray financial statements in any way they pleased. Government deregulation allowed the opportunity for the executives to manipulate these statements in a way that made the company seem profitable and in good financial standing. These false and misconstrued financial statements fooled shareholders into further investing into the company. With this type of freedom to exercise their business in which they pleased, Enron employees were bound merely by their ethical values. Enron employees failed as ethical gatekeepers by not putting a stop to the unethical actions of fellow employees and by they themselves participating in this unethical behavior. As an employee of a company everyone has an ethical duty to perform their job and do it in an ethically acceptable way. Many Enron employees did not question the practices of the company...
Words: 881 - Pages: 4
...Enron: Smartest Guys in the Room Introduction: Enron’s Culture of Greed Enron is considered the most infamous and notorious corporate scandal of the twenty first century, many consider it the worst in the history of the United States (U.S.). The looting of Enron by its executives, the fraud, cover-ups, greed and arrogance precipitated its fall. Shareholders, including many Enron employees, trusting the leadership, filled their 401K portfolios with Enron stock losing $62 billion. In this paper I will give you an overview of the highs and lows of America’s premier energy company, Enron. The political and economic conditions that led to the crash caused by the lack of ethics and morally bankrupt top executives will be discussed. The corporate culture of three other businesses, my former employers, will be discussed to give a greater understanding of corrupt corporate cultures and how easy it is to buy into those lies. Although these businesses are different, they share one thing, greed. To give a greater understanding of corrupt corporate cultures and how easy it is to buy into those lies. Whether its energy, university enrollment, piano/organ chain, or national wallpaper company; unethical, immoral behavior is possible. Executive Team Corruption Ken Lay became the CEO of the newly formed Enron after the merger between Houston Natural Gas (HNG) and InterNorth in 1986. Lay hired Jeffery Skilling, a consultant with McKinsey & Co. in 1990...
Words: 1186 - Pages: 5
...Corporate greed essay To fully understand how the business culture has acquired the greed mindset, a look at what a corporation is and defining corporate behavior becomes the starting point. First a corporation is defined as “an association of individuals, created by law and having an existence apart from that of its members as well as distinct and inherent powers and liabilities (Webster Dictionary).” Although made up of people, being separate or apart from its members also equals unaccountability. The question of “who pays when a company goes under” is at the forefront of discussions today. Corporations are developed to serve society, meet a need or provide a service. Over the years, however, the good intentioned corporation has evolved into a greed machine that has lost site of the community that it serves and the people employed who ultimately perform the work. The steady parade of top executives confessing to engage in price gouging, tax dodges, accounting shams, employee rip-offs, and other shady unacceptable acts are coming to light daily. Unethical and illegal practices are documented from the RJR Nabisco scandals in 1988 to today’s Enron, WorldCom, Merrill Lynch, Arthur Anderson, Xerox, and endless other corporations. The world realizes now that corporate greed is not about one-bad company, but large companies in general that have adopted unacceptable guidelines for corporate behavior and an overall attitude that greed is acceptable. The bottom line, insatiable need...
Words: 2254 - Pages: 10
...culture has acquired the greed mindset, a look at what a corporation is and defining corporate behavior becomes the starting point. First a corporation is defined as “an association of individuals, created by law and having an existence apart from that of its members as well as distinct and inherent powers and liabilities (Webster Dictionary).” Although made up of people, being separate or apart from its members also equals unaccountability. The question of “who pays when a company goes under” is at the forefront of discussions today. Corporations are developed to serve society, meet a need or provide a service. Over the years, however, the good intentioned corporation has evolved into a greed machine that has lost site of the community that it serves and the people employed who ultimately perform the work. The steady parade of top executives confessing to engage in price gouging, tax dodges, accounting shams, employee rip-offs, and other shady unacceptable acts are coming to light daily. Unethical and illegal practices are documented from the RJR Nabisco scandals in 1988 to today’s Enron, WorldCom, Merrill Lynch, Arthur Anderson, Xerox, and endless other corporations. The world realizes now that corporate greed is not about one-bad company, but large companies in general that have adopted unacceptable guidelines for corporate behavior and an overall attitude that greed is acceptable. The bottom line, insatiable need for growth, amoral corporate behavior, expendable and exploitation...
Words: 2265 - Pages: 10
...the failure of Enron? Briefly explain two key factors. Enron collapsed in large part because of the unethical practices of its executives. Egoism (Self interest) was one of the major factors contributed to the failure of Enron. Enron’s executives put their own interests above those of their employees, company and the public, and failed to exercise proper oversight or shoulder responsibility for ethical failings. They allowed themselves to be motivated much more by what would benefit themselves than what would truly benefit the company. Money, greed, arrogance and hubris led company executives to lose focus on working for the good of the company and to act unethically (Gini,2004). Abuse of power to make decisions which were beneficial economically and politically to themselves and the company, was one of the key factors that led to Enron’s failure. Company leaders used insider information and traded millions of dollars in company stock, borrowed from subsidiaries with no intent to repay the loans (Wilke, 2002) , and avoiding federal taxes even though some of its subsidiaries, like Portland General Electric, collected tax payment from customers (Manning & Hll, 2002). Such behaviors of moral failure at the top and irresponsible behaviors led to the collapse of Enron. The unethical behavior of Enron’s leaders appears to be the product of both individual and situational factors. Greed was the primary motivator of both managers and their subordinates at Enron (Cruver, 2002)...
Words: 855 - Pages: 4
...The company is Enron and I found an article that is titled " The Case Analysis of the Scandal of Enron" and in this article the author talks about the business practices on Enron and the unethical research they used to grow their business and in the end they ruined a lot of good people's lives, and damaged their futures. According to "Dictionary.com" (2013) ethics are the values relating to human conduct, with respect to the rightness and wrongness of certain actions and to the goodness and badness of the motives and ends of such actions. Every person has ethics and a code that they live by, but the difference is that not everyone has that same code and especially in the business world that word can be tricky for people and standing up for the code they believe in is hard for some. Unethical business practices is not a new thing, and as the economy has grown these practices have been more common. One unethical practice would be skewing the research results, or the skewing the research from your company. That is one thing that Enron did do, and they even took a step further and did certain practices that no one had ever thought of before. Enron was a natural gas company, and what they did is that they built power plants in a few different places and they took their future earnings from those power plants and recognized them as current assets, so Enron was the first to sell future stocks for their gas and electric company. So this was the companies unethical research, they...
Words: 790 - Pages: 4
... | |Kent Vander Kamp | |7/12/2012 | In 1985 the Inter North Corporation and Houston Natural Gas merged together and formed Enron. The former president of Inter North, Sam Segnar became the president of the newly formed Enron. It was then that it appeared that the corporate culture had changed. Unlike Segnar's predecessor, Willis Straus who was loved by all within his company and achieved an open culture where employees were treated fairly Segnar was often disliked and held in disdain. It appeared that Segnar was an elitist who separated the working class from management so the newly formed Enron began its venture heading down the wrong road by dividing the working class and the elitist. As is seen in many corporate disasters the elitist spending was encouraged and recognized by the new CEO Segnar. (Madsen & Vance, 2009) Through this massive change within Enron its employees and peers developed a hatred for Segnar. This was seen as an opening or an opportunity for Ken Lay. Lay used this opportunity to propose a collaborative board between the two merging companies. This was not seen as unusual however Lay was surprised when Segnar accepted the proposal. However Segnar maintained a majority control over the board. Over a...
Words: 1401 - Pages: 6
... Javier Res 351 December, 2013 Business Research Ethics Unethical behaviors and practices in corporate America cause many faces to frown. This only causes the public to question why a number of people run their business with true honestly. Whereas, the other half run an entire business to the ground by attempting to fraud their customers and lie to the public about certain issues regarding the way they practice business. Another example of unethical practices would be insider trading, security fraud, and manipulation of the financial market. In some cases, unethical practice occurs because of greed, a sense of disconnection, and a sheer sense of ignorance. In this analysis, we will discover why, how and what business has ventured in this path of dishonesty. A prime example of this would be the Enron Corporation, which existed through the means of accounting and security fraud. Some brief information on the Enron Corporation is that it was “A U.S. energy-trading and Utilities Company that housed one of the biggest accounting frauds in history. Enron's executives employed accounting practices that falsely inflated the company's revenues, which, at the height of the scandal, made Enron become the seventh largest corporation in the United States. Once the fraud came to light, the company quickly unraveled and filed for Chapter 11 bankruptcy on Dec. 2, 2001.” (“Investopedia: Enron, 2013.) As Enron began to unravel, there were numerous reports of more accounting fraud...
Words: 748 - Pages: 3
...Business Research Ethics Enron named Most Innovated in America and listed on Fortune’s 100 Best Companies fell from grace. Its success led it to shift its “vision form being the World’s Leading Energy Company to becoming the World’s Leading Company” (Verschoor). Businesses have a social responsibility both legally and ethically. There is nothing illegal about making money, but the manner in which you do so is. Ethics are norms or standards of behavior that guide moral choices about our behavior and our relationships with others. The goal of ethics in research is to ensure that no one is harmed or suffers adverse consequences from research activities (Cooper, Schindler). Enron’s ethical behavior started with its accounting department and the desire for greed. Without a governing body to ensure ethical responsibilities Enron continued to borrow money from itself eventually went bankrupt. In the wake of its missteps were retirements, stock, and countless employees. Enron’s lack of social responsibility, ethical failures, and poor management environment continued a cycle of irresponsibility. The ethical guidelines established by Enron were window dressing, to say the least. The mentality was utilitarian and the unethical cultural dominated poor decisions. “On the surface Enron kept projecting its image of being stalwart and responsible corporate citizen” (Verschoor). Enron’s management decided to utilize outsources bookkeeping to buy reports identifying Enron in good standards. For...
Words: 987 - Pages: 4
...Effects of Unethical Behavior ACC/291 One may describe accounting as a type of language or mechanism that provides information about the financial position of a company. The information provided in the financial statements of accounting is used by investors to determine whether or not to invest in an organization, and used by creditors to determine whether or not a loan should be granted. The mere fact that these financial statements are important and involves money opens doors for unethical practice and behavior. In the past years companies like Enron and WorldCom have been scandalize for its company’s unethical conduct in accounting. In the wake of numerous corporate scandals the Sarbanes-Oxley Act (SOX) of 2002 was created to protect investors by improving the reliability and accuracy of corporates disclosure made pursuant to the securities laws, and for other purposes. Although many companies run their business honestly, others turn out to be criminals, robbing their customers’ qualm, or dragging themselves into illegal practices slowly through good intentions or ignorance. Companies may be tempted to practice unethical behavior in accounting for different reasons such as greed, opportunity, disconnection, and ignorance. Unethical practices and behaviors also include: manipulation of financial, bribery, insider trade, misuse of funds, exaggerating the value of corporate assets, exaggerating revenue, securities fraud, purposely providing erroneous information relating...
Words: 752 - Pages: 4
...The scandal behind ENRON is a subject I had heard and read briefly about but never really knew all of the details. When I watched the film, Smartest Guy In The Room, I really got the opportunity to understand what caused the fall of ENRON and the negative impacts ENRON caused. The film begins by questioning the reasons for ENRON’s fall to bankruptcy in 24 days by addressing the characteristics of Pride, Greed , Arrogance, and Intolerance which were all strong characteristics of the corporate culture at ENRON. Ultimately, the executives and employees at ENRON were blinded by money which eventually sunk their own lifeboat. The movie is definitely a story about people rather than merely addressing ENRON from a financial perspective, and tells the story of the different people behind the rise and fall of ENRON. I was amazed that ENRON was the 7th largest corporation in America with over 70 billion dollars charting the future of energy and power. I also didn’t know all the political connections ENRON had invested with the Bush family and how they were the largest contributor to G.W.Bush’s First Presidential Campaign. This was definitely an alarming point to find out and learn just how politics and corporate America really are tied together. The film talks about Kenny Lay, the founder of ENRON, who grew up poor and wanted to make wealth for himself. Lay really wanted to liberate businessmen from regulation of government and deregulate energy markets. He had a strong desire for...
Words: 1546 - Pages: 7
...Failure Abstract Business practices based on fraud and unethical behaviors can collapse a fortune 500 company. An important element in deciding a business’s success or failure is the structure and behavior of its key leaders. Enron was a successful corporation claiming revenues of almost 100 billion dollars and named in Fortune magazine as America’s most innovative company for six consecutive years. In this paper, specific organization theories can predict and explain Enron’s failures because of greed, lack of business ethics, and deception in what is considered one of the largest corporate scandals of the decade. Enron's Business Failure In July 1985, Houston Natural Gas merged with InterNorth forming the largest energy trading business called Enron (Thakur & Kalra, 2003). Based in Houston, Texas, Enron was a leading supporter of restructuring energy markets in the United States. Growing from a natural gas pipeline company into a marketing giant, Enron managed to build a large and successful organization consisting of more than 20,000 employees and boosting annual revenues of more than $100 billion. Despite Enron’s years of reported success; exposure of deceit, poor managerial business practices, and illegal activities of its key leaders led to the collapse of this marketing giant once known as the largest players in the energy trading business (Electric Power Supply association, 2012). Organizational behavior is the study and application of knowledge about how people...
Words: 747 - Pages: 3
...defining ‘ethics’ focuses on the disciplines that study standards of conduct, such as philosophy, theology, law, psychology, or sociology. (Resnik, 2011) The Enron scandal would be a perfect fit for Business Research Ethics. Enron had unethical behavior problems and injured parties that suffered from their mistakes. In many ways the Enron scandal opened up quite of a few doors for future issues. The company was once a really big company estimated at about $29 billion at the time of the scandal. In the early 2000’s, Enron, was a natural gas pipeline company turned into an online marvel. (Lashinsky, 2001) But in 2001 they came down hard and their entire consumers and staff were in shock. Enron was hypothetical; a company that would help their consumers collects more money. There was some unethical behavior involved in what Enron did, for example; the company was running a Ponzi scheme designed to enrich the top executives and defraud stockholders. ("Decoding Enron," 2002) That, at least, was the impression left by a scalding examination of the company's operations prepared by a special committee of Enron's board of directors. ("Decoding Enron," 2002) There was a report that was made in February 2002 that states that the partnership transactions ''served no apparent business purpose for Enron ("Decoding Enron," 2002) With Enron going down there were quite a few of injured parties that were also caught off guard from this scandal. The collapse of a very strong company injured several...
Words: 769 - Pages: 4
...Annemarie Silva Case Study – Enron Professor John Kuhn September 22, 2014 Introduction When looking at this Enron Case, we come to a conclusion that there was just too many different things that were done wrong. It has been a case that is still being used today to teach the new and upcoming accountants of the accounting profession, what true ethical behavior is, and what we as accountants need to be aware of when auditing clients. Thank goodness that we have regulations that are in place to help avoid such a scandal from occurring in today. Unfortunately there will be other scandals that also will form this industry, especially since we know that we still have areas that need to be fine-tuned in the accounting profession. Question 1 When looking at the Enron case it is hard to point a finger at just one person who is the sole responsible party. Lee Ann Obringer wrote in an article; How Cooking the Books Works “The Enron fraud case is extremely complex. Some say Enron's demise is rooted in the fact that in 1992, Jeff Skilling, then president of Enron's trading operations, convinced federal regulators to permit Enron to use an accounting method known as "mark to market." Looking at this comment we could state that the blame starts with the regulatory governing agency that approved this form of accounting procedure. It’s obvious that whoever did approve this method of accounting procedure did not think about what could occur by allowing this, for it gave a false...
Words: 1563 - Pages: 7
...Enron's Collapse LDR 531 December 12, 2011 Thomas Ach Enron's Collapse Enron was considered to be one of the largest scandals in American history. Americans were shock to find out about the unethical practices that were carried on by leaders and employees of the organization. Enron used many methods of trickery to appear more lucrative than the company really was. While Enron’s stock ascended so did its debt. Individuals within the company decided that they were going to trade millions of dollars in the organization’s stock. When the company’s bankruptcy was discovered, the organization’s stock decreased tremendously. This was a demoralizing hit to investors and also the economic market. While many individuals were shocked from these unethical practices from Enron, many organizational behavior theories can explain how this was permitted in the workplace. Organizational behavior is described as a “field of study that investigates the impact that individuals, groups, and structure have on behavior within organizations, for the purpose of applying such knowledge toward improving an organization’s effectiveness” (Robbins & Judge, 2011). Enron’s executives were motivated much more by how they could benefit from this and not how they could make the company more prosperous. The organizational theory that focuses on self-interest is the political model. Executives having greed and arrogance lead them to focusing only on the good for themselves and not the company...
Words: 640 - Pages: 3
