Week 2 Case Study Case 9: Enron: Questionable Accounting Leads to Collapse 1. How did the corporate culture of Enron contribute to its bankruptcy? Effective leaders are good at attaining common goals and objectives in effective and efficient ways; unfortunately for Enron‚ this was not the case. In the beginnings of the company‚ Chairman Ken Lay and CEO Jeffrey Skilling were efficient in growing their company from a small oil and gas pipeline firm into one of the largest entities in its industry
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1. Adsteam Adonist@gmx.de‚ quigonjinn@hotmail.de was a very model of conglomerate(jujie). In the eyes of the outside‚ it was a successful company. But it’s not true. It’s far from other companies in its complex structure. Adsteam group comprised numerous less-than-majority-owned companies. It acquired major share-holdings in numerous companies throughout the 1980’s. The acquisition strategy resulted in an extremely complicated cross-shareholding-based structure. It was noting that the maximum amount
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in the real auditing procedure. Bankers since they were supposed to be able to find the fraud in their clients’ financial statements when other parties traded those securities with Enron. 2. Anderson’s auditors provided these prohibit services to their public company client Enron: offering consulting service to Enron about their daily accounting decisions and operations which states as “bookkeeping or other services related to the accounting records or financial statements of the audit client” in
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What were the business risks enron faced‚ and how did those risks increase the likelihood of material misstatements in enron’s financial statement Enron faces most of the risk ordinarily faced by any energy company‚ including price instability and foreign currency risks. Enron operated in many different areas of the world with different regulatory and political risks. Enron faced business risks such as a complex business model‚ extensive use of derivatives and special purpose entities‚ aggressive
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The overall cause for Enron’s bankruptcy should be blamed on former chairman and CEO‚ Kenneth Lay. As an Enron executive‚ all of Lay’s concerns should have been focused on Enron’s profits‚ but all he cared about was his property. When he noticed Enron’s financial problem‚ he did not attempt to fix it‚ but made effort to maintain his own benefit and ignored the whole company’s and investors’ loss. His selfish and unethical behavior not only deceived the investors but also finally resulted in Enron’s
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behind corporate governance 1. Agency problem 2. Stewardship theory 3. Resource dependency theory 4. Stakeholder theory 5. Political theory 6. Transaction cost economics 7. Ethical theory C. Principles of corporate governance D. SOX Act‚ E. Enron Scandal‚ Conclusion I. Introduction: The concept of corporate governance in legal and economic terms is equivalent to “the defense of shareholders”. Corporate governance is the response to typical agency problems between investors and managers
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could explain the Enron’s failure. Looking at the organizational structure and management of Enron‚ The structures were flat before the bureaucratic structure developed‚ then the bureaucratic structures developed in order to increase control. There were vertical structures where there was high level of control and according to theories the organizational circle is moving back to flat structure. In Enron Corporation‚ internally it had such a highly decentralized financial control and decision making
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Bibliography: House‚ R.‚ Watt‚ A. & Williams‚ J. (2004) ‘Teaching Enron: The Rhetoric and Ethics of Whistle blowing’. IEEE Transactions on Professional Communication‚ v47 (4):244-255. Janis‚ I. L. (1972) ‘Victims of Groupthink: A Psychological Study of Foreign Policy Decisions and Fiascos’. Houghton Mifflin Company. U
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1. What did Arthur Anderson contribute to the Enron disaster? Arthur Andersen (AA) contributed to the Enron disaster when AA consulting became its own separate entity‚ named Accenture. Revenues from consulting services surpassed revenue from auditing services. A natural competitiveness grew between the two rivals and this is where the problems began to start. Management held maximinizing revenues as their primary focus of success and promotions/bonuses were based on this factor. The CEO of AA‚ Joe
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they believe to be the main contributing factors to the largest corporate collapse in history that of the Texas based energy giant Enron. The consensus of authors‚ experts‚ reporters and basically anyone familiar with the story is that greed is ultimately responsible for the corporation’s demise. This is essentially true and self management theory explains why the Enron executive’s greed did not work out so well for them and the company. Self management is a set of strategies such as self-reward
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