Enron
The Enron scandal was the largest corporate financial scandal ever when it emerged. The effects of the scandal can still be felt rippling through the economy. It will most likely take the economy the better part of a year to recover form the damage the Enron controversy caused to the US as a whole. Enron is not fully responsible, but I feel it was a large contributor to the recent collapse of the stock market. In the past year following the 9/11 hit to our country and economy the DOW has lost close to 4500 points; down to 7500 from almost 12000, it has gained some back, but considering the great depression was only a decline of 2000 points or so, this is obviously a considerable impact on the economy. WorldCom and Tyco, also contributing to the large impacts on the economy, followed the Enron scandal abruptly. However, stock inflations such as these occurring across the entirety of the economy are probably responsible for the sudden jump of the DOW over 10,000 points back in 1998. Corporate fraud against investors and the government cannot continue. Practices as important and flexible as accounting should be conducted hand in hand with moral and ethical codes and obligations. The Enron scandal was the first of its kind, the l
The real travesty of the whole situation came just before all of these corporate acquisitions and bankruptcies ever came about. The top executives of Enron knew that the company and its ”large number of partnerships that kept billions of dollars of corporate debt off the company's books”(Behr and Morgan). Due to the overstated profits and hidden debts, the companies stock became over inflated. The executives sold off most of their shares in the company, totaling hundreds of millions of dollars, before the scandal started to emerge. Once the scandal emerged the stock plummeted, 20 points in one day. Thousands of Enron employees had retirements, 401k’s, and their futures riding on their stock in the company, however not able to sell the shares under corporate policy, all of the employees and retirees lost everything while the top executives made out like bandits. After sixteen years in business and becoming one of the “largest electricity and natural gas traders”(timeline) on December 2, 2001 Enron filed for chapter 11 bankruptcy protection with the government. This came shortly after the company filed ”documents with the SEC revising its financial statements for the past five years to account for $586 million in losses”(timeline). Apparently Enron had overstated its earnings by $567 million dollars over the past five years (timeline). Due to this information and other allegations and investigations done by the SEC into Enron’s financial statements causes its talks with Dynegy to fall apart. Enron was on t
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Approximate Word count = 1040
Approximate Pages = 4 (250 words per page double spaced)
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