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Essay on The Lack of Ethics at Enron Caused Financial Disaster
Enron portrays the example of corporate ethics bankruptcy. In this 21st century Enron signifies the unethical business conducts and malfunctions that ended up leaving no room for the investors to seek diversification. Enron collapse is the representative of how unethical conduct led to a financial disaster. In this paper we are going to discuss how lack of ethics at Enron and illicit manipulation of auditing practice led to the greatest financial disaster in the American history.
Much of the blame is on the shoulders of the top executives in Enron while the rest resides with the auditing firm-Arthur Anderson. In fact the top executives are to blame so much so that one critic even called them as “robber barons” (Wood, 2002). However, the inadequate role of governmental regulations cannot be ignored as well.
In November 2001, Enron filed for Chapter 11 bankruptcy. A year before that, the corporate bubble of Enron was blown when ‘actual’ financials became public and once fifty billion dollar company crumbled to worthlessness. Legal and illegal liabilities amounted to more than $56 billion that made the company a hefty short of $6 billion in debt (Audet, 2004). $50 billion! From nothing to a corporate giant employing more than 21,000 employees, having operations in more than forty countries and earning corporate profits that marked it as the 7th biggest company in America, Enron makes a case of corporate lying and fraudulent practices (BBC News, 2002). The financial statements of Enron said nothing about its extensive leverage, heavy debt and big losses. What does these financial statement deficiencies indicate? In my opinion, they indicate a loophole in the financial reporting system of America. High level of trust in the accountancy profession and the brand name of Arthur Anderson was enough to satisfy the investors. Further on, the reports....
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