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The Widespread Effect of The Enron Scandal

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Before Enron’s breakdown, Enron was one of the world’s significant power, gaseous petrol, correspondence companies in the world. It is true that Enron was one of America’s most imaginative organizations in the previous six successive years. Until 2001, it guaranteed that it had about $101 billion dollars in income according to an “Investopedia Article”. The crazy thing to think about is, Enron Company declared bankruptcy on December 2, 2001. 

In the minds of the general population, the majority feel that Enron’s breakdown was to be because of moral issues. Sadly, the officials used their representative’s trust in their administration to be pawns in the scheme. The most serious issue in Enron’s breakdown are the lies and the false accounting practices they would use to gain more investors. Enron basically catfished the entire world, by hiding their true numbers that weren’t always positive, putting them inside in their financial statements, but in places nobody would check. Which of course would lead to the insane amounts of money they pulled in from investors, in just 3 years they raised their stock over 300% in price. Now there were a few moral issues that happened inside of Enron which hurt and influenced the workers to fall and become part of the scandal. The moral issue was that Enron urged their representatives to put resources into the company when the CFO realized their organization was not in a condition to succeed and their stock wasn’t near the price they were wanting. Additionally numerous flawed bookkeeping systems came out to the public which was leading towards the breakdown.

There were many problems that helped the company collapse. Among all of them, are an absence of truthfulness by the higher ups about the state the company was in, the senior executives really thought Enron had to be the greatest at everything it did and that the company needed to protect their reputations. There is zero evidence when Enron’s CEO (Jeffrey Keith Skilling) told the workers that the stock would most likely rise and that he hid that he was selling the stock. Only the investigation around Enron’s bankruptcy allowed shareholders to notice the CEO stock sell-offs. Also the conflict of interest, a man named Arthur Andersen, who acted in two roles from the auditor but also as a consultant to Enron. Leading the managers to manipulate ways around transferring their debts out of the company and they didn’t come up on the balance sheet. Therefore reported revenues and earnings were completely chalked, leaving the world who didn’t know better blind. Obviously affecting the stakeholders in Enron the most, who also had no idea. In order to gain the investors trust, they created a consistent profit situation in the organization, Enron stock traders were pushed to forecast high future cash flows and low discount rate on the long-term contract with Enron.

To conclude, the collapse of Enron has affected several parties which include the stockholders, employees, customers and suppliers, communities and also the United States as a whole. Thousands of employees lost their jobs and their retirement savings. Stockholders also lost their investment as Enron’s stock drop rapidly. The sudden fall of Enron came as a shock to the public as it not only affected the lives of the stakeholders, but it also affected the economy as a whole.    

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The Widespread Effect of the Enron Scandal. (2022, August 30). GradesFixer. Retrieved September 22, 2022, from https://gradesfixer.com/free-essay-examples/the-widespread-effect-of-the-enron-scandal/
“The Widespread Effect of the Enron Scandal.” GradesFixer, 30 Aug. 2022, gradesfixer.com/free-essay-examples/the-widespread-effect-of-the-enron-scandal/
The Widespread Effect of the Enron Scandal. [online]. Available at: <https://gradesfixer.com/free-essay-examples/the-widespread-effect-of-the-enron-scandal/> [Accessed 22 Sept. 2022].
The Widespread Effect of the Enron Scandal [Internet]. GradesFixer. 2022 Aug 30 [cited 2022 Sept 22]. Available from: https://gradesfixer.com/free-essay-examples/the-widespread-effect-of-the-enron-scandal/
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