Enron & Sox Corporate Governance - Essay Example

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The Enron Case study basically revolves around the fact of the deliberate and calculated financial and managerial improprieties that were behind the collapse of the firm. …
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Enron & Sox Corporate Governance
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"Enron & Sox Corporate Governance"

Download file to see previous pages The evidence adduced from the different case studies point to the fact that the company sought to build a false image of growth and performance in order to give an impression about its stature, which would be used to deceive the shareholders (Hanilton, 2003). The deliberate manipulation of the company’s balance sheets was meant to sustain its image as one of America’s rapidly growing companies that had stepped out of the conventional ways of doing business to engage new and revolutionary practices that were apparently effective (Topping, 2005). Various factors played together towards the eventual collapse of the firm. Many of these forces were structural while others were strategic (Topping, 2005). Other analysts have pointed to the fact that the macro-economic and micro-economic factors contributed to the eventual collapse of the firm. It might be argued that some of the actions and strategies initiated by the different managers of the firm eventually developed into multiple challenges that led to the collapse of the firm (Hanilton, 2003). Market forces, cultural differences, financial strategies and other factors worked together to contribute to factors that systematically brought down a firm that analysts had endorsed as a model of growth. Fraud and Inside Trading Under the stewardship of Jeff Skilling, Enron manipulated its accounting records so that they did not reflect its liabilities (Hanilton, 2003). ...
Critics have often pointed at this as acts of intimidation and outright unprofessionalism. Through such practices, the company sued several lawyers and the media, which attempted to reveal the true nature of the company (Kluyver, 2009). Another feature of corruption in the company involved the posting of profits and losses in entities that were off-shore. There was also the deliberate concealing of affiliate firms that made losses while only including those firm that were fairly successful. As such the entire financial position of the company was a misrepresentation of facts. From another dimension, there was rampant inside trading at the company. The management of the company gave away confidential and privileged information to firms that had special relation to Enron and other firms that were related to the management (Hanilton, 2003). As a result of these preferential inside trading practices, Enron had adverse effects on trading practices of the American corporate sector. Analysts have pointed out that the culture of Pride, arrogance and intolerance were to blame for the managerial challenges and unprofessional conducts that affected Enron (Gibney, 2005). According to the same analysts it took sixteen years to build their assets from 10 to 65 billion but only 24 days to go bankrupt. The culture of managerial arrogance was also attributed to the fact that most of the personnel at the institution were former nerds, and that they sought popularity by compromising on ethics and professionalism to achieve their goals. While stepping out of the traditional forms of business management and organizational strategies, the firm did not adequately engage with the internal challenges of dissent and the cultural challenges of initiating new ...Download file to see next pagesRead More
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