Contomporary issue in accounting - Essay Example

Therefore, the existence of the manager-stockholder conflict is undeniable and there are legal as well as business methods of resolving such conflicts. The range of conflicts may be as simple as the corporate social responsibility of the firm to as complex as ethical issues that come up when the management seeks to defraud or cheat its shareholders outright. An understand of such issues becomes important for all students of management, finance, and even sociology since many corporations of the world have budgets which exceed the budgets of sovereign nations in the world today.

To better understand these issues, real world examples from companies such as Enron, Apple Inc. and GE would be necessary. Of these, the case of Enron stands as a prime example of what disasters can result when the management gives itself and the results it wants to have priority over the shareholders and stakeholders of the company. Enron had a problem of vision as described by Welch (2005). Enron was created in 1985 when Kenneth Lay’s small company named Houston Natural Gas was merged with the parent company of Nebraskan-Northern Natural Gas named InterNorth.

The new entity was named Enron and before this merger, both firms were dealing with the distribution of oil as well as electric energy. They were also involved with the construction, expansion and the maintenance of power plants, pipelines and other similar energy related infrastructure (Thomas, 2002). Under the new company, Kenneth Lay became the Chief Executive Officer and his vision of the company was quite different from what the shareholders might have wanted at the time. This is because Lay wanted to expand the company rapidly into new markets while creating new markets from scratch as well.

Of course a successful vision of the CEO would have meant increased value for the shareholders as the stock price would have been maximized and success of the company would have meant job