Enron : Ethics And Law

sprees, wild corporate “gatherings” became the norm. Employees who could not afford the lavish lifestyle created at Enron began to take a toll on them. Trying to keep up with the crowd, lower level employees found themselves maxing out their credit cards and putting themselves in debt. This created an environment that seemed to worry less about earning actual profits. According to Li (2010), shareholders and employees were told by Enron’s CEO the stock would probably rise but did not disclose he was selling his stock while telling everyone else to buy. Shareholders were completely unaware of the irregularities going on at Enron and were constantly lied to about the company’s actual health. Actually, employees were never told by any of Enron’s top management team, the true status of the company. Li (2010) stated not only until the investigation surrounding Enron’s bankruptcy enabled shareholders to learn of the CEO stock sell-off before February 14, 2002 which is when the sell-off would otherwise have been disclosed. However, the most damaging act was committed by the accounting firm Arthur Andersen. According to Li (2010), their reputation was damaged by their admission on January 10, 2002 that employees of the firm had destroyed documents and correspondence related to the Enron engagement. The shredding of documents was a clear admission of guilt which eventually caused Arthur Anderson to also file for bankruptcy. Auditor’s reputation is based on being reliable, honest, and

Enron’s ride is quite a phenomenon: from a regional gas pipeline trader to the largest energy trader in the world, and then back down the hill into bankruptcy and disgrace. As a matter of fact, it took Enron 16 years to go from about $10 billion of assets to $65 billion of assets, and 24 days to go bankruptcy. Enron is also one of the most celebrated business ethics cases in the century. There are so many things that went wrong within the organization, from all personal (prescriptive and psychological approaches), managerial (group norms, reward system, etc.), and organizational (world-class culture) perspectives. This paper will focus on the business ethics issues at Enron that were raised from the documentation Enron: The Smartest Guys

Enron’s ride is quite a phenomenon: from a regional gas pipeline trader to the largest energy trader in the world, and then back down the hill into bankruptcy and disgrace. As a matter of fact, it took Enron 16 years to go from about $10 billion of assets to $65 billion of assets, and 24 days to go bankruptcy. Enron is also one of the most celebrated business ethics cases in the century. There are so many things that went wrong within the organization, from all personal (prescriptive and psychological approaches), managerial (group norms, reward system, etc.), and organizational (world-class culture) perspectives. This paper will focus on the business ethics issues at Enron that were raised from the documentation Enron: The Smartest Guys

Bryn Bradshaw-Mack “Enron: The Smartest Guys in the Room”: A Legal Perspective Often times in business as the stakes get bigger and better, the methods in which they are obtained get worse. Throughout the film, “Enron: The Smartest Guys in the Room”, this unfortunate truth is frequently apparent. There are numerous instances when Enron executives perform potentially unlawful practices in order to profit the company, and subsequently themselves. One example of this is when Jeffrey Skilling, chief executive officer at the time, demanded that Enron’s accounting system be changed to “aggressive accounting” in order to hide the company’s debt and mislead its investors.

Enron is viewed by many as the quintessential corrupt corporate juggernaut. Corporations are nothing more than a collection of people. If a corporation is corrupt than it must be filled with corrupt employs, and led by a front office devoid of moral standards, right? Perhaps this is not entirely true. Certainly an element of corruption was present in the case of Enron, the number of corrupt employees may not have been as encompassing as presumed. When asked to rate their level of honesty, most would respond that they are honest. In actuality, most people are not completely honest, and their level of dishonesty is correlated with their ability to rationalize the dishonesty and preserve their self- image as an honest and admirable person

As with much of Enron, their outward appearance did not match what was really going on inside the company. Enron ended up cultivating their own demise for bankruptcy by how they ran their company. This corrupt corporate culture was a place whose employees threw ethical responsibility to the wind if it meant financial gain. At Enron, the employees were motivated by a very “cut-throat” culture. If an employee didn’t perform well enough, they would simply be replaced by someone who could. “The company’s culture had profound effects on the ethics of its employees” (Sims, pg.243). Like a parent to their children, when the executives of a company pursue unethical financial means, it sets a certain tone for their employees and even the market of the company. As mentioned before, Enron had a very “cut-throat” attitude in regards to their employees. This also became one Enron’s main ethical falling points. According to the class text, “employees were rated every six months, with those ranked in the bottom 20 percent forced to leave” (Ferrell, 2017, pg. 287). This system which pits employees against each other rather than having them work together will create a workplace of dishonesty and a recipe of disaster for the company. This coupled with the objective of financial growth, creates a very dim opportunity for any ethical culture. “The entire cultural framework of Enron not only allowed unethical behavior to flourish,

Question 1 Summarize 1 one page how you would explain Enron’s ethical meltdown: Enron was an energy company founded by Kenneth Lay in 1985 through a merger of vast networks of natural gas lines. Enron specialized in wholesale, natural gas, and electricity, and made its money as a wholesaler between suppliers and customers rather than actually owning any. Enron in fact didn’t own any assets, which made their accounting procedures very unusual. The lack of accounting transparency at Enron allowed the company’s managers to make Enron’s financial performance better than it actually was. The organizational culture at Enron was to blame for it’s ethical meltdown. Enron’s accounting scheme slowly began to erode its ethical practices, which soon led the culture of Enron to become a more aggressive and misleading business practice. Enron reported profits from joint partnerships that were not yet attained in order to keep stock prices up (or make wall street happy). As this was happening employees began to notice the ethics in senior management (leadership) deteriorating, and soon after they to would follow in their footsteps. Senior management thought they were saving their company from financial ruin and though lying was ok if it meant saving the company. Investors would surely sell their stocks if they really knew the situation the

Ethical issues have greatly transformed in our lives since the great Enron, Xerox and other huge corporations proposed big profits showing earnings of billions of dollars and yet in reality facing bankruptcy. These corporations faced great trouble with the federals and state for manipulating financial statements. But not only corporations can be blamed on this, accounting firms were involved in this as much as the corporations were. With the business stand point, ethics comprises of principles and standards that guide behavior. Investors, traders, customers, and legal system determine whether a specific action is ethical or unethical. Ethical issue is a vast subject, but we will look at the niche

Ethics is something that is very important to have especially in the business world. Ethics is the unwritten laws or rules defined by human nature; ethics is something people encounter as a child learning the differences between right and wrong. In 2001, Enron was the fifth largest company on the Fortune 500. Enron was also the market leader in energy production, distribution, and trading. However, Enron 's unethical accounting practices have left the company in joint chapter 11 bankruptcy. This bankruptcy has caused many problems among many individuals. Enron 's employees and retirees are suffering because of the bankruptcy. Wall Street and investors have taken a major downturn do to the company 's unethical practices. Enron 's

The performance of a team depends not only on the motivation and skills of members, but also on how members are organized to use their skills. The design of work roles and the assignment of people to them determine how efficiently the team carries out its work. Performance will suffer if a team has talented people but they are given tasks for which their skills are irrelevant, or if the team uses a performance strategy that is not consistent with member skills.

Unfortunately, scandals like Enron are not isolated incidents and the last decade has offered Americans a disheartening perspective with comparable scandals like that of WorldCom and Tyco, Sunbeam, Global Crossing and many more. Companies have a concrete responsibility not just to their investors but to society as a whole to have practices which deter corporate greed and looting and which actively and effectively work to prevent such things from happening. This

Being the president of a company would render many challenges, including the responsibility for establishing the values for the organization. Incorporating life experiences would be a great determinate in establishing such values, in addition to considering what has been witnessed in the past concerning the success and downfall of other organizations, such as the unethical decisions of the organizational leaders of Enron, realizing that Enron had a written policy, however choosing to value financial greed (Hansen, Alge, Brown, Jackson, & Dunford, 2013). Therefore, I would set expectations high, developing a code of conduct, along with the expected values of the company, which would include the value of integrity. By making it known on the front end that honesty is the best policy, in addition to living the example, employees will demonstrate trust and respect, therefore developing a strong work relationship.

Most of the world has heard of Enron, the American, mega-energy company that “cooked their books” ( ) and cost their investors billions of dollars in lost earnings and retirement funds. While much of the controversy surrounding the Enron scandal focused on the losses of investors, unethical practices of executives and questionable accounting tactics, there were many others within close proximity to the turmoil. It begs the question- who was really at fault and what has been done to prevent it from happening again?

As noted, the SEC and the Justice Department have broad powers to investigate that far exceed those of the auditors, but SEC and Justice Department investigations, for even a limited reporting period, take years and the resulting prosecution even more years. A case in point is

To understand the contributing factors leading to the ethical meltdown at Enron, one must first understand the cultural norms of the organization, because, organizational culture according to Al Saifi (2015) is the centerpiece in describing and implementing the organization’s goals. Cultures according to Johnson (2015) are a combination of things that one can see and things that one cannot see, but, are in the minds, and in the form of ideas, feelings, and belief (p. 381). When an individual joins an organization, they already have a set of principles that come along with them; but, the organizational culture in which they are going tends to have a significant effect on the actions and performance of these individuals (Al Saifi, 2015). Most of the individuals involved in the Enron case are described as people who would have done exceptionally under different circumstances or in other organizational cultures (A Conversation About the Documentary 'Enron: The Smartest Guys in the Room,' 2012). However, the culture of profit making at all cost, which is the dominant culture at Enron, transformed the actions of these employees, forcing them to act unethically. Upon my evaluation of the video "A Conversation About the Documentary 'Enron: The Smartest Guys in the Room,'" I was able to identify the following elements within the culture of Enron that contributed to the moral downfall of the organization; these are the elements of greed, arrogance, and superiority.