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Finance & Accounting
Pages 4 (1004 words)
Running Head: Enron Ethical Breach Enron Ethical Breach [Writer’s Name] [Institute’s Name] Enron Ethical Breach Enron Corporation was a Houston-based American energy and services company established by Kenneth Lay in 1985. The company, which was believed to be the “most innovative company” of the United States and one of the world’s leading electricity, natural gas, communications, pulp and paper company, was formed by merging Houston Natural Gas and InterNorth.
Its stocks continued to increase at a modest rate, but in 1999 – 2000, investors saw a sudden 87% increase in 2000, which coupled with the company being named the most innovating company in America, meant the future prospects for the shareholders seemed excellent. Unfortunately, it was revealed in October 2001 that this almost sudden increase in investors’ confidence was due to accounting loopholes and fraudulent auditing, which allowed the company’s shares and returns to be appearing more favorable than they actually were. This ethical breach included the involvement and dissolution of Arthur Andersen, one of the most famous auditing firms of the world at the time. There is no reason to believe that Enron participated in corrupt practices since its inception in 1985, rather, evidence indicates that the ethical breach that lasted about a decade began several years later, when Jeffrey Skilling was hired and a team of executives was developed to cater to the accounting needs of the company. ...
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