Enron Business Failure

Enron Business Failure

Running head: ENRON BUSINESS FAILURE

Enron Business Failure
University of Phoenix
Organizational Leadership
LDR 531
Lawrence Vierra
September 22, 2010

Enron Business Failure
2002 was a year marked by an unprecedented number of corporate scandals such as Global Crossing, Tyco International Ltd., Enron, Halliburton, and AOL Time Warner. Enron became an icon as the most significant corporate failure due to scandal. In the end, Enron was just another case of failed corporate governance, greed, and accounting misrepresentations.
“The Enron Corporation was one of the largest companies which sold electricity and natural gas, distributed energy and other services like bandwidth interest connection and provided risk management and financial services to consumers the world over” (Clark).  
How does a company of this caliber fail? Many reasons exist for the collapse of Enron. These reasons include: (1) The conflict of interest and separation of duties breech of Arthur Anderson, who played dual roles as both corporate auditors and consultants; (2) lack of financial truthfulness about the business operations and accounting irregularities; (3)   lack of consideration by members of the board of directors to the financial activities which were happening off the books; and (4) Enron’s thriving internal culture where executives believed that failure was not an option, and they needed to be the best. If mistakes were made, they would cover them up (Nakayama, 2002). Many people believe the primary reason for the Enron bankruptcy was caused by the operations management team.
All the loopholes within the company allowed, Andrew Fastow, the chief financial officer (CFO), along with other executives were able to mask billions of dollars of debt from projects and deals that were unsuccessful. The executives presented misleading information to the board of directors and to the audit commission. The compilation of these acts caused stock prices to plummet, inevitably...