Enron
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- Date Submitted: 02/27/2011 10:31 AM
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Enron Corporation
Instructor Business Law
27 January 2011
Enron Corporation is an energy trading, natural gas, and electric utilities company that is based in Houston, Texas. It used fraudulent accounting techniques that allowed it to be listed as the seventh largest company in the United States. It created the phony energy crisis in California and became the largest corporate scandal in history.
Describe how Enron could have been structured differently to avoid such activities.
Enron like most public companies are required by law to disclose its transactions to its shareholders. Enron failed to to disclose facts that were important to the transaction. The should have had better financial oversight and should not have gone for the fast buck. The company should have organized themselves differently. From the get go they should have stuck with their original structure instead of hiring people from outside the company and giving them power to make decisions that would change the company. Enron gave their top performers bonuses and stock options. This was all controlled by internal authority and did not work properly. The people in control formed alliances and were not honest about reporting their figures. This created a larger profit and higher stocks. But in reality it was all a fraud to pad their pockets more. Mismanagement of huge proportions, disregard to organization and financial irresponsibility were all factors in its fall. Organizational structure is key to any business. The people chosen to make the company’s important decisions in Enron were top management but did not have the productive objectives in mind. Key decision making was left up to the chief financial officer and the chief operating officer. This was outside their abilities.
Mr. Jeff Skilling wanted profits at all costs. The people recruited under this belief were to be of a certain type. They wanted a someone who had no reservations about closing a deal no matter what. The people in...
Instructor Business Law
27 January 2011
Enron Corporation is an energy trading, natural gas, and electric utilities company that is based in Houston, Texas. It used fraudulent accounting techniques that allowed it to be listed as the seventh largest company in the United States. It created the phony energy crisis in California and became the largest corporate scandal in history.
Describe how Enron could have been structured differently to avoid such activities.
Enron like most public companies are required by law to disclose its transactions to its shareholders. Enron failed to to disclose facts that were important to the transaction. The should have had better financial oversight and should not have gone for the fast buck. The company should have organized themselves differently. From the get go they should have stuck with their original structure instead of hiring people from outside the company and giving them power to make decisions that would change the company. Enron gave their top performers bonuses and stock options. This was all controlled by internal authority and did not work properly. The people in control formed alliances and were not honest about reporting their figures. This created a larger profit and higher stocks. But in reality it was all a fraud to pad their pockets more. Mismanagement of huge proportions, disregard to organization and financial irresponsibility were all factors in its fall. Organizational structure is key to any business. The people chosen to make the company’s important decisions in Enron were top management but did not have the productive objectives in mind. Key decision making was left up to the chief financial officer and the chief operating officer. This was outside their abilities.
Mr. Jeff Skilling wanted profits at all costs. The people recruited under this belief were to be of a certain type. They wanted a someone who had no reservations about closing a deal no matter what. The people in...