The Nature of the Fraud and the Impact to the Company

Enron was a very prosperous and prominent firm that was an American energy company established in Houston, Texas. Enron was formed in 1985 by Kenneth Lay after he had acquired two other gas companies in his quest to become a conglomerate in the American history. Nonetheless, after Enron’s biggest scandal, shareholders lost around $11 billion as the company continued on the downward spiral. Enron finally filed for bankruptcy at its $63.4 billion in assets were completely diluted. Many of the stockholders got measly pennies back for the huge investments they had in the company. Enron was charged with cooking the books along with their associates Arthur-Anderson. In essence, the company was running a Ponzi scheme. A Ponzi scheme is a strategy used by creditors to attract new investors in the company and utilize their funds to pay off old debts. Enron’s financial statements did not comply with the operations and finances of the shareholders and analysts (2002). The Enron Scandal and the Neglect of Management Integrity Capacity http://scholar.googleusercontent.com/scholar?q=cache:gxCBEAYU1csJ:scholar.goo). Moreover, the Enron management continued to implement unethical practices as they would modify the balance sheet in order to favor the revenue goals that the corporation wanted to achieve (2010). Non-Media Jury Prejudice and Rule 21(a). http://findarticles.com/p/articles/mi_7725/is_201010/ai_n57243330/) The continuous spiral of modifying the financial statements became a continuous habit and the lead cause of the downfall of the company. Undoubtedly, managers in corporate America have to protect the interests of the corporate executives along with the goals of the stakeholders. The management clearly neglected responsibility for overseeing the unethical practices that were plaguing the corporation. The Enron scandal continued to grow worse every year as it became a problem that was out of control (2010). Non-Media Jury Prejudice and Rule 21(a). http://findarticles.com/p/articles/mi_7725/is_201010/ai_n57243330/). The primary motivation for Enron was to keep their gross income high along with cash flow while diminishing their liabilities and long-term debts. The moral and legal framework that has been embedded in S The dynamic culture environment of Enron was clearly based on a money-making scheme. Corporate employees were under constant pressure to reach their revenue goals that the firm came up with. In essence, Enron’s corporate culture can be best depicted through aggressive growth, risk-taking, profit planning and commercial innovations. Although some may deem this as positive values, one cannot diminish the fact that a corporation must acknowledge and mitigate the risks (2006). Four Years After Enron. http://www.independent.org/publications/tir/article.asp?a=585). Since these values were not balanced and were never embedded in the principles of corporate integrity, the goal to reap high revenue became the core culture value for the organization.

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