Enron Case Answer
Enron Case Answer
1. Who were the key stakeholders involved in, or affected by, the collapse of Enron? How and to what degree were they hurt or helped by the actions of Enron management?
Outline:
Key stakeholders involved or affected by the collapse of Enron
How were the key stakeholders hurt or helped by the actions of Enron management
The degree of Enron management actions’ hurt or helps to the key stakeholders
The key stakeholders involved or affected by the collapse of Enron were thousands of employees and retirees who lost their jobs and the investment; Banks-J.P. Morgan Chase and Citigroup who lost billions in market value and faced major write-downs on bad loans; Shareholders and Mutual fund investors; Governmental figures-Bush family; Regulatory Authorities-FERC, SEC and CFC.
The actions of Enron management were extending the business model into other commodities to keep the company’s stock price and profits growing which helped shareholders, using political strategy to promote deregulation and reducing government oversight on company’s trading by donating large money to the political parties which helped Governmental Figures, using a “rank and yank” system to make the employees afraid of questioning the company’s unethical and potentially illegal business practices which hurt the employees, using executive compensation and reward systems to tied performance without ethical and oversight which caused employees to do whatever it took to make the accounting numbers look good which is unethical to the employees, using “asset light” strategy to maintain company an investment-grade credit which hurts the banks, entering into series of increasing complex financial transactions with SPEs to conceal company’s large debt which hurt the stakeholders’ right to know the truth and using Mark-to-Market, Sham swaps and Prudency accounting strategy to manipulating revenue which hurt the stakeholders a lot.
2. Considering all aspects of the case, what factor of
1. Who were the key stakeholders involved in, or affected by, the collapse of Enron? How and to what degree were they hurt or helped by the actions of Enron management?
Outline:
Key stakeholders involved or affected by the collapse of Enron
How were the key stakeholders hurt or helped by the actions of Enron management
The degree of Enron management actions’ hurt or helps to the key stakeholders
The key stakeholders involved or affected by the collapse of Enron were thousands of employees and retirees who lost their jobs and the investment; Banks-J.P. Morgan Chase and Citigroup who lost billions in market value and faced major write-downs on bad loans; Shareholders and Mutual fund investors; Governmental figures-Bush family; Regulatory Authorities-FERC, SEC and CFC.
The actions of Enron management were extending the business model into other commodities to keep the company’s stock price and profits growing which helped shareholders, using political strategy to promote deregulation and reducing government oversight on company’s trading by donating large money to the political parties which helped Governmental Figures, using a “rank and yank” system to make the employees afraid of questioning the company’s unethical and potentially illegal business practices which hurt the employees, using executive compensation and reward systems to tied performance without ethical and oversight which caused employees to do whatever it took to make the accounting numbers look good which is unethical to the employees, using “asset light” strategy to maintain company an investment-grade credit which hurts the banks, entering into series of increasing complex financial transactions with SPEs to conceal company’s large debt which hurt the stakeholders’ right to know the truth and using Mark-to-Market, Sham swaps and Prudency accounting strategy to manipulating revenue which hurt the stakeholders a lot.
2. Considering all aspects of the case, what factor of