accoutning
The Enron Scandal can not be simply regarded as the normal bankruptcy; not because it is the seventh largest corporation in America, or the large amount shareholders and investors lose massive money. The reason is that the unethical practices of Enron threaten people’s fundamental trust in economic system. Meanwhile, the unethical management practices at Enron, which are against the ethical principles of the Global Business Standard Codex result in the collapse of the company, and bring the massive damage to the investors, stockholders and employees. The negative impacts will be depicted with reference to three ethical principles which are the transparency principle, the dignity principle and the responsiveness principle.
The management practices at Enron, such as hidden debit and the inflated profits completely ignore the existence of the transparency principle. This disregard brings the significant losses to the stockholders. The transparency principle is one of the most important principles in Global Business Standard Codex. It plays an important role in the groundwork for forming a sustainable, just and trust economy environment. The management practices at Enron were totally against the no deception in the transparency principle. (Dugan, I. J., Berman, D. & Barrionuveu, A. 2001) Enron created a large number of entities whose sole intention was to miss the rule for consolidation. Therefore, billions of dollars’ debt was able to exclude from their balance sheet. Meanwhile, interest expense was also excluded which inflated profits in attempt to increase the price of the stock. (Culpan & trussel 2005) For example, in June 1999, up to $1.27bn of assets were moved off from the Enron balance sheet and delayed their losses on the repot. (Benton 2004) The hidden debit and the inflated profits do helpful to the stock market. On 23 August 2000, the stock rose to the peak of $90.56. However, when the actual financial situation was released by the press, the share
The management practices at Enron, such as hidden debit and the inflated profits completely ignore the existence of the transparency principle. This disregard brings the significant losses to the stockholders. The transparency principle is one of the most important principles in Global Business Standard Codex. It plays an important role in the groundwork for forming a sustainable, just and trust economy environment. The management practices at Enron were totally against the no deception in the transparency principle. (Dugan, I. J., Berman, D. & Barrionuveu, A. 2001) Enron created a large number of entities whose sole intention was to miss the rule for consolidation. Therefore, billions of dollars’ debt was able to exclude from their balance sheet. Meanwhile, interest expense was also excluded which inflated profits in attempt to increase the price of the stock. (Culpan & trussel 2005) For example, in June 1999, up to $1.27bn of assets were moved off from the Enron balance sheet and delayed their losses on the repot. (Benton 2004) The hidden debit and the inflated profits do helpful to the stock market. On 23 August 2000, the stock rose to the peak of $90.56. However, when the actual financial situation was released by the press, the share