Enron And Its Impact On Enron s Downfall Essay - 1492 Words

Abstract 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 production to the knowledge economy. Many lessons can we learn from its collapse. In this paper we present an analysis of the factors that contributed to Enron’s rise and failure, underlying the role that energy deregulation and manipulation of financial statements played on Enron’s demise. We summarize some lessons that can be learned in order to prevent another Enron and restore confidence in the financial markets, as well as in the accounting and auditing professions. Introduction Financial statement analysis is a foremost tool in predicting bankruptcy and probability of business failure. It helps investors and creditors to assess growth rates and income prospects to compare investment alternatives and make financial decisions.However, the Association of Certified Fraud Examiners highlights the frightful fact that companies can manipulate their financial statements. Such manipulation is financial statement fraud which occurs when the financial statements are prepared or reportedShow MoreRelatedEnron 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 MoreThe Downfalls Of Enron, By Han, Henry959 Words   |  4 Pagesfactors or critical issues presented in the case are the downfalls of Enron, which originated out of Houston Texas by Han, Henry(n.d.). He was one of the highest paid Chief Executive Officers in 1999. This organization was aware of the first gas pipeline company that implied known worldwide. The company covers the world’s leading electricity innovations, personnel management, and risk management processes. Also, further studies the company s dramatic failed complex issues that the forced company toRead MoreCorporate Social Responsibility Of The Enron Corporation1124 Words   |  5 PagesIntroduction We will look at the Enron Corporation and discuss its application of Corporate Social Responsibility (CSR) or in actuality its irresponsible behavior as related to social responsibility. We will revisit what CSR is and discuss Enron’s philosophy regarding its use and function within the corporation. We will discuss the consequences of Enron’s irresponsible behavior and the far reaching effects it had on society. Corporate Social Responsibility are actions taken by a corporationRead MoreEssay on Enrons Fraudulent Accounting and Financial Information992 Words   |  4 Pagesbe wage and pension increases. This report offers information on operating results and financial conditions of companies to stakeholders as well as to shareholders. Any fraudulent financial reporting of a company like Enron for example would have a widespread and severe impact on employees, business acquaintances, investors as well as stakeholders and shareholders if the company went bankrupt. But are financial statements as truthful as they seem? There are many different types of safetyRead MoreEnron Scandal And Its Impact On The Economy Essay1305 Words   |  6 PagesThe Enron scandal was the largest corporate financial scandal ever when it emerged. It took the economy the better part of a year to recover from the damage the Enron controversy caused to the US as a whole. Enron is not fully responsible, but it was a large contributor to the collapse of the stock market in the early 2000’s. In the year following the 9/11 hit to our country and economy the DOW lost close to 4500 points; down to 7500 from almost 12000, it did gain some back, but considering the greatRead MoreEnron And The Natural Gas Industry1542 Words   |  7 PagesEnron Background: Enron, based in Houston, Texas, was founded by Kenneth Lay as an energy and pipeline company in 1985 from the merger of two natural gas pipeline companies, Houston Natural Gas and InterNorth. The impetus for Lay to start Enron was the deregulation of the natural gas market in the mid 1980’s, which relaxed the rules on natural gas prices and allowed for more flexible agreements between natural gas producers and pipeline managers. These changes essentially eliminated the practiceRead MoreEnron Was An American Gas Company1480 Words   |  6 Pagesmany people discuss Enron, they immediately associate it with one of the most scandalous accounting scams in history. Enron was an American gas company that arose as the Northern Natural Gas Company in 1931. Internorth was a holding company in headquartered in Omaha, Nebraska, purchased the Northern Natural Gas Company and restructured it is 1979. Founder Kenneth Lay formed the company by merging the two companies and created Enron. E nron was founded in 1985, as one of the world s leading electricityRead MoreEnron s Ethics Code Of Enron Essay943 Words   |  4 PagesAbstracts Enron was once one of the largest companies in the world. After many years of using diverse accounting tricks, they finally had to file bankruptcy in December 2001 due to not being able to hide billions in debt. The top 140 executives got paid 680 million in 2001. (CNN Library, 2015). Kenneth Lay as the founder of Enron and Jeffrey Skilling as the chief executive were both convicted in 2006. (Weiss, 2009, p.28). Thousands of workers were left with valueless stock in their pensions whichRead MoreThe Ethics Of The Enron Case1622 Words   |  7 PagesIntroduction The Enron case is well known for being the largest corporate bankruptcy in American history. Thousands of people world-wide lost billions of dollars, lost life savings, and lost their jobs. Due to the vast corruption, greed and the blatant disregard for integrity from the very top of Enron leadership, world markets crumbled and investor confidence in corporate America was severely damaged (Chandra, 2003.) We will look at the accounting fraud committed by Enron executives and interestedRead 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 the