Enron Corporation Scandal and Crisis - Research Paper Example

Download file to see previous pages All the stakeholders of Enron felt cheated when it filed for bankruptcy protection in December 2001. Now, the Enron scandal is seen as one of the worst corporate scandals in the corporate history of the U.S.A. This research paper tries to explore the Enron scandal right from the history of Enron, how top officials and auditors acted without any ethics how Enron's top management was involved in accounting fraud, and also various recommendations to avoid the Enron-like scandal in the corporate world of the U.S.A. in the coming days.

Enron Scandal – An Analysis
A summary of the history of Enron.
A Houston-based energy and commodity trading company, Enron is presently under Federal bankruptcy reorganization protection. With the help of more than 3,500 foreign and domestic subsidiaries, Enron carried out business in different industries and markets, including wholesale commodity and merchant business, the administration of retail customer energy services, the management of energy–associated assets, the management of gas transmission systems and management of broadband services. The basic roots of Enron can be traced to a domestic natural-gas pipeline company that was established as early as 1930. Up to 1960, Enron functioned as a domestic natural-gas pipeline company.

Enron, in the year 1960, started a chain of changes that expanded the company into other energy markets (Joint Committee of Taxation, 2003, p.52).
The federal deregulations of natural-gas pipelines were introduced in the year 1985. Due to this regulation, Enron emerged as a new entity due to the merger of InterNorth, a Nebraska-based Pipeline Company with Houston Natural Gas. Enron inherited heavy debt due to the merger process and due to the deregulation, Enron no longer had special rights to its pipelines. For its survival, Enron had to make up with an innovative and new business strategy to earn revenues and maintain cash flow. The then-CEO of Enron, Kenneth Lay engaged McKinsey & Co to help it in establishing its business strategy.  ...Download file to see next pages Read More