Enron The Leading Factor That Had Enron Into Its Demise...

The leading factor that had Enron into its demise revolves around the notion that, â€Å"companies are often so concerned with appearance and damage control that they are unwilling to engage in the degree of examination required to root out the entrenched causes of trust violations† (Hurley, Gillespie, Ferrin Dietz, 2013). The historical performance of Enron’s rising share prices, coupled to the constant positive media attentions, only added fuel to the fire in terms of Enron’s competitive culture. As a consequence of these external factors, Enron’s top management felt the need to be able to sustain their image of rapid growth, since negative balances on their financial reports would have been an indication to investors that Enron may not be as successful as it appeared after all, leading to possible negative repercussions towards their overall performance, and potentially inevitably lead to its ill-fated downfall. Therefore to prolong their fate, Enron employed the use of highly questionable accounting methods and the use of deceiving partnerships, such as SPE’s (Special Purpose Entities), with the aim to create a faà §ade that they’re highly successful by shrouding losses, falsifying profits and to conceal debt amounts. The first breach in accounting conduct is evident through their use of mark-to-market accounting Investopedia defines this term as the accounting act in recording the value/price of a given security at its true reflection of the current market value instead ofShow MoreRelatedThe Ethics Of The Enron Scandal1441 Words   |  6 Pages The definition of ethics is living one s life according to right or wrong behavior both towards others and themselves (Ghillyer, 2014). How a person derived to their beliefs of right or wrong is a direct reflection of several factors such as; family upbringing, and religious dynamics. Each of these characteristics plays a major role in the direct choices a person will make in their day to day lives. While some people can stand by their personal beliefs regardless of the situation, there areRead MoreThe Collapse Of Enron And Enron1736 Words   |  7 PagesAbstract Fortune used to rank Enron as the most successful business in the United States. The collapse of Enron was shocked the whole world energy trading market. It caused significant losses to investors. In this paper shows analysis reason of factors that lead to Enron demise and also lessons can be learnt from Enron case study. The approach which have used in this paper to respond, the case study question are the background of the case organization and how business structure had been use by the case organizationRead MoreEssay on Enron: Questionable Accounting Leads to Collapse705 Words   |  3 PagesENRON: QUESTIONABLE ACCOUNTING LEADS TO COLLAPSE CRYSTAL RUFF GLOBE UNIVERSITY ABSTRACT This paper summarizes the article listed in reference that reported on the demise of Enron and the contributing factors that led to the financial downfall of a great company. The roles of the corporate culture, Enron’s financial staff, and even the chief financial officer are all to blame for the events that lead to the finality of the company that resulted in bankruptcy. While Enron boasted aboutRead MoreEnron And Corporate Culture Of Enron1322 Words   |  6 PagesIntroduction In 1985 The Enron Corporation came into existence after a successful merger between two gas pipeline companies. The company nurtured a very competitive culture, which encouraged employees to win at any means necessary. Enron’s culture led employees to â€Å"cast loyalty and ethics aside in favor of high performance† (Ferrell, p. 494). The executives of Enron covered up their increasing debt by using special purpose entities. Meanwhile, Enron continued to report increasing profits to theirRead MoreThe Demise Of The Andersen Accounting1746 Words   |  7 PagesThe Enron scandal was one of the most notorious bankruptcies of all time. Many people know about the energy titan’s downfall but less realize that it was also one of the biggest auditing blunders in American corporate history, leading to the dissolution of the Arthur Andersen LLP, which at the time was one of the five largest auditing and accountancy partnerships in the world. The most intriguing aspect of this case is that Andersen was eventually cleared by the United States Supreme Court, yet theRead MoreEssay about The Downfall of Enron1734 Words   |  7 Pagesfabrication of monetary factors within the company and â€Å"can affect organizational performance and is costly to employers, employees, shareholders, and other organizational stakeholders† (Cox 263). When a corporation practices proper ethics, it is representing not only itself in a positive manner, but its partners, shareholders, and clients as well. On the other hand, when an organization partakes in unethical activities, all parties are negatively affected. The collapse of Enron is a major case of unethicalRead MoreEnron Scandal And Its Ethical Implications1744 Words   |  7 PagesEnron Scandal and Its Ethical Implications Introduction Enron’s collapse in 2002 was perhaps the most shocking and widely publicized ethical violations of all times. Once one of the world’s largest energy company, Enron’s downfall and the demise of its accounting firm Arthur Andersen, highlight corporate America’s moral failings. Enron was charged with substantial accounting frauds by manipulating its major accounts and by masking its massive debts. The company stock that once peaked at $90 was downRead MoreEnron And The Enron Corporation2203 Words   |  9 PagesNearly all accounting instructors utilize the so-called â€Å"Enron Scandal† as a means to educate students on accounting ethics and how regulations in the accounting world were enacted. The 2001 scandal involved two parties: Enron Corporation, a U.S. energy commodities firm, and their auditors Arthur Andersen, LLP, currently a U.S. holding company and formerly one of the â€Å"Big 5† U.S. accounting firms. When the scandal broke, Enr on was one of the most innovative companies in the world and Arthur AndersenRead MoreEnron And Its Impact On Enron s Downfall Essay1492 Words   |  6 PagesAbstract recent collapses of high profile business failures like Enron,Worldcom,Parmlat,and Tycohasbeen a subject of great debate among regulators, investors, government and academics in the recent past. Enron’s case was the greatest failure in the history of American capitalism and had a major impact on financial markets by causing significant losses to investors. Enron was a company ranked by Fortune as the most innovative company in the United States; it exemplified the transition from the productionRead MoreFraud : The Perfect Fraud Storm1420 Words   |  6 Pagesthe United States: Enron and WorldCom. It was determined that both organizations fraudulently overstated assets, created assets from expenses or overstated revenues, costing investors billions of dollars and resulting in both organizations declaring bankruptcy (Albrecht, Albrecht, Albrecht Zimbelman, 2012). Nine factors contributed to fraud triangle creating this perfect fraud storm, and assisting management in concea ling the fraud until exposed and rectified. Nine Factors of the Fraud Perfect