The failure of enron case study article

The collapse of Enron case study Q1.

The key stakeholders involved in, or perhaps affected by the collapse of Enron happen to be: employees and retirees, a large number of them dropped their jobs and the expenditure, the executives: Kenneth Place, Jeffrey Skilling and Claire Fastow that they sold significant blocs of company stock, have conflicts of interests, government numbers, Lay had close personal tie with all the Bush family members, Enron’s initiatives influence plan making, regulating authorities: Goods Futures Trading Commission (CFTC) and Investments and Exchange Commission (SEC), their organization partners: Arthur Anderson and Vison Elkins, the rival Dynergy, the two banks: Citi Bank and J.

L. Morgan Run after and the latter are the consumers and shareholders. The stakeholders let the fall of Enron through their very own carelessness and lack of oversight. Employees were afraid to question the company and their owners and business partners endured form the same financial issues of interest. The government do not guarantee the managers action will be aligned with stakeholders passions, they have close and personal marriage between uppr manager and Board of director and company governance brokers and have large compensation intended for board affiliate. The accounting methods used by management to manipulate Enron’s income.

The prize system let employees to help make the accounting figures look good. The deregulation triggers the market be volatile and risk, consumers and manufacturers are problem. Regulators adjustment did not enough, Enron’s economical statements look like a black package. The business partners encourage Enron do some doubtful activities. Because of the collapse, the 2 banks experienced major write-downs on negative loans and before the break the managing still lying to workers to with invested in Enron’s stocks. Q2. The corporate approach in Enron encourages the organization use against the law and questionable ways to boost value.

Enron’s compensation and award system and the “rank and yank system allow executives employ questionable actions and the employees afraid to ask the question to prevent be open fire. The against the law accounting methods cause the organization collapse. Deficiency of stakeholders oversight and the politics influence providing Enron the competitive benefit (deregulation). Q3. For company managers in Enron, they must consider more ethical ways to achieving its objectives. They should lower the compensation to board associates, increasing responsibility to the panel member to oversight you can actually operations.

Pick the board member outside the firm officers. Make use of the accounting method that intent of misrepresenting a company’s financial statement. The company ought to make the relatively policy to leave employees understand the ethical infractions are critical and produce some treatment to illegal activities. Government bodies such as the SECURITIES AND EXCHANGE COMMISSION’S should done backdoor investigations into the way the company’s earnings were being produced. The accounting and law firm should have responsibility for their romance between all their clients. Plus the business coverage should have limiter agency to monitors all their behaviors.