Enron scandal reaction paper. Reaction Paper on Enron Scandal complianceportal.american.edu 2022-11-17

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The Enron scandal, which came to light in 2001, was one of the biggest corporate scandals in history. The energy company, which was once seen as a darling of Wall Street, collapsed in spectacular fashion, leading to criminal charges for many of its top executives and the loss of thousands of jobs and billions of dollars for its shareholders.

The roots of the scandal can be traced back to the 1990s, when Enron began to shift its focus from traditional energy production to the trading of energy derivatives. This new business model was highly lucrative, and Enron's stock price soared as a result. However, the company was engaging in a number of questionable practices in order to maintain its impressive financial performance.

One of these practices was the use of off-balance-sheet entities, also known as special purpose entities (SPEs), to hide debt and inflate profits. Enron used these SPEs to transfer assets and liabilities off its balance sheet, making its financial statements appear much healthier than they actually were. This allowed the company to mislead investors and analysts about its true financial condition.

Another tactic that Enron employed was the use of mark-to-market accounting, which allowed the company to recognize profits on long-term contracts in the current period, even if those profits had not yet been realized. This allowed Enron to report inflated earnings and deceive investors about the company's actual financial performance.

The Enron scandal had a number of consequences, both for the company and for the broader business world. Enron filed for bankruptcy in 2001, and many of its top executives, including CEO Kenneth Lay and CFO Andrew Fastow, were charged with crimes related to the scandal. In addition, the scandal led to significant reforms in the financial industry, including the passage of the Sarbanes-Oxley Act, which increased oversight and accountability for publicly traded companies.

The Enron scandal had a devastating impact on the lives of many of the company's employees and shareholders, who lost their jobs and saw the value of their investments plummet. It also had a negative effect on the public's trust in corporate America and the financial industry, leading to increased skepticism and scrutiny of corporate practices.

Overall, the Enron scandal serves as a cautionary tale about the dangers of corporate greed and the need for transparency and accountability in business. It is a reminder that even seemingly successful and reputable companies can engage in unethical behavior, and that it is important for investors and the public to be vigilant and demand honesty and integrity from those who hold positions of power and influence.

Enron Reaction Paper

enron scandal reaction paper

The most disturbing part of the film is the California electricity crisis. How the scandal was discovered The scandal was discovered on October 22, 2001, by the Securities and Exchange Commission when a huge loss had been announced by the Enron expressing a major public sign of trouble. Reaction Paper on Enron Scandal Case Background Enron was a US Energy company that was established in 1985 after the merger of two energy companies - Houston Natural Gas and InterNorth Inc. Early on in the film we learn that Lay comes from a humble background and did not grow up with a lot of money. The Enron collapse of 2001 occurred when Enron, a company that had previously been wildly successful in the stock market, declared bankruptcy. Lehman Brothers file bankruptcy, Merrill Lynch was bought out by Bank of America, and AIG, an insurance company that sold insurance to investment banks to cover the downturn of investments, was on the brink of financial distress along with so many other failing financial institutions.

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Reaction Paper on Enron Scandal complianceportal.american.edu

enron scandal reaction paper

Interestingly enough up to the point when he retired Skilling was always reporting positive results no matter the Enron stock price. Fasto was able to attract outside investors to put money into these smaller companies because of his connection to Enron and his position as CFO. Skillet resigned from the position of CEO after cashing out his stock and destroying the company. Banks termed too big to fail. From his childhood, he learned the value of hard work to earn a living and to achieve his ultimate goal to be rich.

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Enron Scandal

enron scandal reaction paper

When the executives sentenced to years of imprisonment, not all of them pleaded guilty. Company in the year 2001 that was filed for bankruptcy leaving its investors and retirees with worthless stock. Lay was ble to maintain an image of righteousness while looting Enron and its shareholders. They should carefully observe that all standards are being implemented. Mgt 498 Week 4 Ethics Paper 762 Words 4 Pages During an investigation there were many questionable accounting transactions that were brought up, such as large executive bonuses as well as many loans for large amounts of money that were later forgiven without repayment. Greed has no place in a business setting.

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Enron Case

enron scandal reaction paper

One may wonder how this is possible with the cleaver work of chief executive officer of Enron this transformation of making Enron a financial trade company done by hidden huge amount debt and inflating earning. For instance, the founder of Enron, who replaced Skilling as the CEO after he resigned, Kenneth Lay was convicted of fraud and conspiracy. In an already tumultuous market the preferred stock of the two firms tumbled to below a dollar. And they were too late to take out all of their money and put it back into the bank. By the year 2001 the company had risen to be ranked the 7 th largest U. In the final analysis, the conspiracy of Kenneth Lay, Jeffery Skilling, and others, including the accounting firm of Authur Anderson, led to the collapse of Enron due to fraud, shady accounting practices, false reporting revenue, and general disregard of virtually every principle of business ethics. The auditing firm considered more the benefits that they can get as this is one of their big clients and set aside ethical actions in their field.


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Enron Scandal Reaction

enron scandal reaction paper

Of all the executives tied to the Enron scandal Fasto appears to have shown the least amount of resistance during the government investigation. He was aiming to make wealth for himself and for his family. The Tariff placed high taxes on imports leading to a decline in international trade. Miller Business Communications 12 April 2010 Sarbanes-Oxley and Its Effect On American Businesses In a world full of scandals and immoral acts. What need to be done by the Government and also your suggestion as to how to avoid the above scandal. Although the film does not mention his trial, I did additional research and learned that he is presently in prison until 2028.

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(DOC) Enron Scandal Paper

enron scandal reaction paper

The chief executive officers are supposed to vouch for the financial statements of their companies for clear accountability and transparency. . As an accounting student, it serves as a lesson for me that no matter how much money offered to me to make something like fraud or wrongdoings; I will not accept it and I will protect my reputation and dignity. Many believe erroneously that the stock market crash that occurred on Black Tuesday, October 29, 1929 is one and the same with the Great Depression. Lay began as and forever remained a staunch advocate for free markets and deregulation of markets. This was done between 1993 and 2001 when the scandal was revealed. The corporation had employed thousands of people who had affiliations right up to and including the White House itself.

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ENRON SCANDAL REACTION complianceportal.american.edu

enron scandal reaction paper

From the introduction of the first income tax in 1862 to present. Finally, the first casualty of this scandal was the accounting firm of the Enron Corp. Although the film does not make any outright allegations of political wrong doing it did highlight some interesting relationships. Employees of Enron loss their retirement saving, jobs and some even committed suicide as a result to the down fall of Enron. All this and more was conducted with one clear objective in mind: to make as much money as possible through manipulation. The intention of this practice was to cover the deal makers together with the executives who were given significantly huge cash bonuses in addition to stock options Bryce, 2008.

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The Enron Scandal, Research Paper Example

enron scandal reaction paper

At the time of the collapse, Enron was the largest bankruptcy in history. People want to know, why was there not one single arrest of a high ranked executive following the biggest market crash in history. The company, however, declared bankruptcy in 2001 as a result of a major accounting fraud scheme orchestrated by its executives. It was geared to getting a steady income, inflating the assets values with off booking liabilities. September 2008 was the month that saw the fall of many financial institutions.

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REACTION PAPER ENRON

enron scandal reaction paper

According to the Mid-American Journal of Business MAJB , Enron serves as the. . These subprime mortgage derivatives were the entire center of the meltdown that resulted in millions of jobs being lost, and millions of lives ruined. In July 2002, Sarbanes-Oxley Act was signed by Pres. Companies can no more offer loans to the directors of the company. The film focuses on scandal after scandal with different employees involved in those scandals. In fact, he defended the two traders at the heart of the scandal, even in the face of allegations that they had Discussion Question 2 Greed, power and personal satisfaction are all characteristics that motivate people to do things that might not always be in the best interest of others.


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