In considering the state of the business world according to ethics or lack thereof, a student must examine and learn from ethical issues before entering the workforce. Certainly, landing a job leading to an illustrious career is at the top of everyone's to-do list, yet there are ethical lessons to heed from in the past, present, and perhaps the future; especially from companies like Enron. Therefore, this paper seeks to address ethical issues as they pertain to and revolve around the Enron scandal, while providing supportive analysis accordingly.
Case-by-case, the world has witnessed on the news how greed can topple any organization that operates unethically. The lessons learned while brought under the microscope of the public eye, warns those of us who are transitioning from being a student, to a professional seeking the "ideal job" we have always dreamed of. However, that ideal job with all its' perks are only rewarding if the organization within which one works, abides by business laws and follows its' own code of conduct and ethical policies. A prime example of such an organization is Enron, as they represent the giant collapse of an organization that buckled at the knees of unethical decision making; driven by greed.
[...] With the introduction of off-balance-sheet companies, it slid from creativeto economic and social- destruction. Enron's losses on speculative and strategic moves reached such proportions that management desperately turned to a qualitatively new and more reckless gambit: improperly structured partnerships, hedge transactions, and deliberately falsified accounting. Unlike proper off-balance-sheet transactions, these new counterparties were capitalized with Enron's own stock and managed by insiders. The financing of the partnership in effect meant that Enron was insuring itself para.1). The key thing to note here is that these unethical practices were calculated, executed, and carried out gradually and undetected. [...]
[...] Retrieved June 11th from: http://www.fmlink.com/article.cgi?type=How%20To&title=The%20Business%20 of%20Ethical%20Behavior&pub=BOMI%20International&id=31160&mode=source Additional Reference Innovation Corrupted: The Origins and Legacy of Enron's Collapse. By Malcolm S. Salter. Cambridge, Mass.: Harvard University Press viii + 525 pp. Tables, appendix, notes, bibliography, index. Cloth, $ ISBN: 978-0-674-02825-8. [...]
[...] In 2000, a year before its demise, average compensation for the firm's top two hundred executives was million per person 1.4 billion in total), although total profits for the company were under a billion dollars. High turnover among senior managers left gaping holes in the company's oversight capacity. Top managers who remained were able to avoid restrictions on exercising options by exploiting loopholes in the stock option plan, adding even more motivation to drive up the share price artificially in order to keep the company's profit machine running at any price (p.2, para.1). In analyzing this, we see that compensation and bonuses were handed out that exceeded the profits in the year 2000. [...]
[...] Title Analyst Conflicts of Interests 6. Title Commission Resources and Authority 7. Title Studies and Reports 8. Title Corporate and Criminal Fraud Accountability 9. Title White Collar Crime Penalty Enhancement 10. Title 10: Corporate Tax Returns 11. Title 11: Corporate Fraud Accountability As one can see, the Sarbanes-Oxley Act includes strict rules and regulations for which all public accounting firms are held accountable for, to ensure that future scandals won't happen again. In exploring such scandals, an analysis of the issues at hand regarding Enron follows. [...]
[...] Kobrak (2009) further mentions that although no formal charges or suits were brought against Enron's board of directors, Salter finds that they failed to act in accordance with principles or ideals of corporate governance. Ostensibly, the board possessed many of the qualities recommended by codes of good corporate governance- experience and knowledge of the company, relevant expertise in finance and the sector, and no overt conflicts of interest. In contrast to the directors' own views, Salter blames the board's failure to detect fraud on director compensation, outmoded board procedures, and an inability to master the essential qualities of Enron's business plan. [...]
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