Examining a Business Failure Paper
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Examining a Business Failure Paper
Business failure occurs often in today’s current environment. Organizational behavior theories could prevent or explain a company’s failure. In the case of Enron, this company became one of the biggest frauds and failures in American history. The failures of this company became well known as the Enron scandal and the company is a symbol of corporate scandal and fraud. The scandal was an accumulation of poor management decisions. In this paper, I will describe how specific theories could have explained its failure.
Enron
Before the company became one of the biggest corporate frauds in American history, the Enron Corporation based in Houston, Texas, was a leading energy company that distributed electricity and natural gas across the country. The corporation employed more than 22,000 employees and at the end of 2000, the corporation earned revenue of $101 billion. The financial reporting in 2001 uncovered accounting inaccuracies that revealed a company that was no longer sustainable. Andrew Fastow chief financial officer and other executives of Enron concealed debt of billions from ineffective deals. The executives deceived the corporation’s board of directors and because of these deceptions 4,000 individuals lost their jobs and many more lost their investments. The Corporation at the end of in 2001 filed for bankruptcy protection. In 2004, the company came out of bankruptcy and later changed the company’s name to Enron Creditors recovery Corporation. The court found numerous executives guilty of various charges and sentenced them to jail. According to Enron Corporation (2010), “More than 30 people were charged with various crimes arising from Enron’s business practices.” Arthur Andersen, the company’s auditor was also held responsible by the court. Because of the scandal, the government put in place new regulations like the Sarbanes-Oxley Act to ensure the truthfulness of financial reporting.
Leadership and...
Business failure occurs often in today’s current environment. Organizational behavior theories could prevent or explain a company’s failure. In the case of Enron, this company became one of the biggest frauds and failures in American history. The failures of this company became well known as the Enron scandal and the company is a symbol of corporate scandal and fraud. The scandal was an accumulation of poor management decisions. In this paper, I will describe how specific theories could have explained its failure.
Enron
Before the company became one of the biggest corporate frauds in American history, the Enron Corporation based in Houston, Texas, was a leading energy company that distributed electricity and natural gas across the country. The corporation employed more than 22,000 employees and at the end of 2000, the corporation earned revenue of $101 billion. The financial reporting in 2001 uncovered accounting inaccuracies that revealed a company that was no longer sustainable. Andrew Fastow chief financial officer and other executives of Enron concealed debt of billions from ineffective deals. The executives deceived the corporation’s board of directors and because of these deceptions 4,000 individuals lost their jobs and many more lost their investments. The Corporation at the end of in 2001 filed for bankruptcy protection. In 2004, the company came out of bankruptcy and later changed the company’s name to Enron Creditors recovery Corporation. The court found numerous executives guilty of various charges and sentenced them to jail. According to Enron Corporation (2010), “More than 30 people were charged with various crimes arising from Enron’s business practices.” Arthur Andersen, the company’s auditor was also held responsible by the court. Because of the scandal, the government put in place new regulations like the Sarbanes-Oxley Act to ensure the truthfulness of financial reporting.
Leadership and...