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Corporate Corruption: Culture of Enron

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General public
Study
finance
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northeaster...

About the document

Alex G.
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documents in English
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Word
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school essay
Pages
4 pages
Level
General public
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  1. Introduction
  2. The incentives for managers
  3. The 217 page report issued by Enron's board
  4. Leaders and managers of Enron
    1. The main way for promotion
    2. Hierarchies of managers
    3. The lack of trust and cooperation
  5. Creative accounting and misleading profit reports
  6. Conclusion

Shareholder value was being diluted. It was worse than just being dishonest: stock options provided managers with strong incentives to get the value of their stocks up quickly - what mattered was not long-term strength but short-term appearances. Corporate officers responded to the incentives and opportunities. Over the last 15 years, executive rewards in America have soared, and so have stock prices of those companies.

[...] The recent Enron collapse has sent shockwaves all over the financial world and raised serious questions regarding corporate governance: How could America's seventh largest corporation suddenly declare bankruptcy when their stock price was so high? How did this occur? Currently, there are more than 10 separate committees investigating possible wrong doings and illegal activities, such as fraud and insider trading. Information suggests that Enron made its money by falsifying many documents. By cooking the books and throwing their debt onto other recently established companies they hid losses and increased their revenues and profit, Enron executives were able to keep the ratings of their companies at very high levels. [...]


[...] There is a lack of trust and cooperation. People often hide important information from each other and even sabotage each other's efforts to ensure that only they will come up on top. There is no regard for the larger picture and the overall goal of the company. It is everyman for himself. Both management and workers are obsessed with their own survival and self-interests. As a consequence, the organization is fragmented and there is a lot of waste of valuable resources because of duplications and sabotage. [...]

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