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Essay on The Enron Scandal that Showed Poor Ethical Practices



Essay on The Enron Scandal that Showed Poor Ethical Practices

The Enron Scandal remains to be among the biggest in history and it led to massive loss as well as the fall of a corporation that was once the pacesetter in the Energy Industry and the joy of Wall Street. Part of its downfall is attributed to poor ethical practices at the corporation that led to $700m net earnings and $1.2b shareholders equity disappearing as well as $4b plus in hidden liabilities. (Dorji, 2014)

Ethical issues often begin from the top management and it is here that several poor ethical choices were made. Enron’s consulter and auditor, Arthur Anderson, as well as other top management always hid their failures and it is this not coming clean on time that was a poor practice. Enron was also purposefully making wrong calculations on their shareholders equity and its possessions. This practice though falsified, put it on the map as the company that was doing very well, when in real sense it was not. It was also unethical for the Enron Chairman, to have unfair advantage over other companies by getting an insider in the stock market provide him with ideas on price trading and participating in the exchange with this unfair advantage. (Singh, 2009) Enron managers were also unethical in their practices because many were the times that they lowered their moral standing to accommodate immoral decision making. It is a fact that they were constantly looking the other way to accommodate malpractice ignoring their managerial duties.Essay on The Enron Scandal that Showed Poor Ethical Practices

Enron executives knew that they had been lax at their capacity to fulfill their integrity purpose and that is why they found themselves pleading the Fifth Amendment in their hearing with Congress where they were supposed to shed light on what had just happened. (Singh, 2009)

One of the shareholders, Arthur Anderson, also acting as chief of auditing was responsible for most of the unethical auditing practices at the firm. Enron top management continuously lied to the shareholders that all was well even as the company was falling apart and being sold in bits and pieces. This was unethical because shareholders deserve to know the truth especially when things are bad because they have invested their money in a company. It is this constant lies and cover-ups that failed the company.Essay on The Enron Scandal that Showed Poor Ethical Practices

The workers sometimes knowingly, and sometimes unknowingly, also committed unethical crimes. They for instance, had opportunities to question the practices going on at Enron but they didn’t. They had this false belief that working for such a powerful company that they were untouchable.

The auditing firms responsible for Enron also hid huge debts, which was unethical. From the board, stemmed the biggest ethical concern, of the fact that they were only concerned with shareholder and did not take time to look at what management was doing in their activities, which led to the down fall. (Johnson, 2017)

Enron was also made the unethical choice of actively pursuing short-term money making that eventually led to its downfall. (Johnson, 2017) There is no harm in looking for short-term benefits if the process is legal and transparent. In the case of Enron, false pleasing the shareholders with a fast rise in profits was unethical because they were sugar coating them and it took less than a year for those same profits to fall drastically. Enron would still be surviving today had it not been led by greed that led to fraud and poor management of resources. People think that it is okay to make money by all means possible, well the collapse of Enron taught us to choose ethics

Dorji, J. (2014). Enron and its ethical issues.Retrieved 26 April 2018, from
Johnson, W. (2017). The Enron Scandal & Ethics. Disfluent. Retrieved 26 April 2018, from
Singh, S. (2009). Ethics Issues at Enron. Retrieved 26 April 2018, from