enron ethical issues summary

Thesis on Enron Ethical Issues Assignment The Congressional Research Service of the United States Congress published a report for members of Congress looking in to the Enron failure (Jickling, 2002) in February 2002, which offered "An Overview of Financial Issues" relative to the Enron … Enron: What Caused the Ethical Collapse ...Case 1 ENRON: WHAT CAUSED THE ETHICAL COLLAPSE? In addition, society’s fixation on short term profits and daily market moves also increased the pressure to manipulate results and to hide financial bad news. They overlook the fact that the same qualities and strategies so often praised in business and other leadership literature can lead to disaster. They manipulated information while engaging in inconsistent treatment of internal and external constituencies. Leaders cannot articulate the concerns of followers unless they first understand their needs (Kanungo & Mendoca, 1996). Gruley, B., & Smith, R. (2002, April 26). The Enron collapse had a huge effect on present accounting regulations and rules. Enron's heyday has long ended. Enron officials put their loyalty to themselves above those of everyone else with a stake in the company’s fate — stock holders, business partners, rate payers, local communities, foreign governments, and so on. Driven by a concern for people, they seek to treat others fairly and recognize that they hold their positions in stewardship for others. On the issue of character, I agree with Dennis that the Enron debacle seems to be character-based. reports, hidden losses and other tactics were all designed to keep the stock price artificially high. However, when the firm’s stock price began to slide, the company was unable to back its guarantees. The paper describes the political, historical, and economic conditions that led to Enron’s rise and fall from a variety of leadership and ethical perspectives. Thousand Oaks, CA: Sage. Report: Enron board aided collapse. general populace were not wary about the validity of these statements. from the company, which resulted in the bankruptcy of the company. The company’s leaders did many things right according to the leadership and management literature. Enron hurt the lives of many people, and a company based on the principles of Enron is a company with no moral conduct at all (Wxiaom,2012). Excess typified top management at Enron. Academy of Management Journal 42, 539-552. An ENRON Scandal Summary of the acts of Embezzlement undertaken by ENRON Executives may be defined as the criminal activity involving the unlawful and unethical attainment of monies and funding by employees; typically, funds that are embezzled are intended for Leaders seeking self-benefit focus on personal achievements, and control followers through coercion and reward. As college graduates, Enron managers undoubtedly enrolled in leadership and ethics courses. These SPEs , backed by Enron stock and illegally run by company insiders, were designed to keep debt off the firm’s balance sheets and helped prop up its share price. Enron’s relationships with both employees and outsiders were marked by gross inconsistencies. billion; this total is considered to be a result of misappropriated Ethics is concerned with the kinds of values and morals an individual or a society finds desirable or appropriate. In addition to charges related to shady partnerships, Enron stands accused of: Much of the blame for what happened at Enron (nicknamed the “Crooked E” for its tilted Capital E logo) can be laid at the feet of company founder Kenneth Lay, his successor Jeffrey Skilling, chief financial officer Andrew Fastow, and Fastow’s top assistant Michael Kopper. attracted new investors desiring the enjoy the apparent financial gains enjoyed 2. 6). Reebok scam 2012 fraud Karan Kukreja. Mr. Kenneth Lay was the CEO and chairperson of the company, he hold a Ph.D. in Economics. Elliott, A. L, & Schroth, R. J. Ethical Issues in Today’s Business World. http://specials.ft.com/enron/FT3648VA9XC.html. Corporate ethics: Right makes might. investments while reporting fraudulent earnings to those investors; this not Average workers were forced to vest their retirement plans in Enron stock and then, during the crucial period when the stock was in free fall, were blocked from selling their shares. Workers enjoyed such benefits as lavish Christmas parties, aerobic classes, free taxi rides, refreshments, and the services of a concierge (Enron excess, 2002; How Enron let down its employees, 2002). A1, A5. Greenleaf, R. (1977). Unfortunately, the teaching of ethics, like the practice of ethics at Enron, is typically decoupled from the rest of the curriculum. case summary | Kenneth Lay, former chairman and chief executive officer (CEO) of Enron Corp., claimed to be a moral and ethical leader and exhorted Enron’s officers and employees to be highly ethical in their decisions and actions. undertaken within a setting in which its participants retain advanced education (2002, August 7). Term Paper on Ethical Issues of the Enron Case Assignment Partnerships can be an easy and effective way to raise money. The sense of betrayal experienced by Enron employees only added to the pain of losing their jobs and retirement savings. 201-211). Enron scandal, series of events that resulted in the bankruptcy of the U.S. energy, commodities, and services company Enron Corporation and the dissolution of Arthur Andersen LLP, which had been one of the largest auditing and accounting companies in the world. However, Rest, J. R. (1993). Ethical motives are the codification of moral judgement. Bryce, R., (2002). The Enron scandal involves both illegal and unethical activity and the courts of law will. The destructive power of individual greed and pride was magnified by Enron’s corporate culture that encouraged creativity and risk taking. Fraud Cases in Auditing Raymond Kulzick. (pp. Apparently no member of the firm had the courage to bring the misbehavior of Lay and his subordinates to the attention of the public before the crisis erupted (Cruver, 2002). Enron Company. The Oregonian, pp. Each failed to meet important ethical challenges or dilemmas of leadership (Johnson, 2001). Legal Issue in Business: The Case of Enron Legal Issue in Business: The Case of Enron Introduction Business ethics is based on normative ethics , standards that ethics are upheld and applied specific to distinguish what is right or wrong, that is to say what should be done or who should not be fact. Additionally, the Financial Accounting Standards Board (FASB) substantially raised its levels of ethical conduct. Servant leaders continually ask themselves what would be best for their constituents and measure their success by the progress of their followers. completely understand. What Enron’s top leaders, lower level managers, and front line employees learned in university classrooms was not enough to prevent ethical tragedy. Five-hundred officials received “retention bonuses” totaling $55 million at the same time laid off workers received only a fraction of the severance pay they had been promised (Barreveld, 2002). Enron scandal, series of events that resulted in the bankruptcy of the U.S. energy, commodities, and services company Enron Corporation and the dissolution of Arthur Andersen LLP, which had been one of the largest auditing and accounting companies in the world. Business Week Online. They manipulated information while engaging in inconsistent treatment of internal and external constituencies. Enron Corporation is an energy trading, natural gas, and electric utilities company located in Houston, Texas that had around 21,000 employees by mid-2001, before it went bankrupt. Employees invented a host of new commodity products which earned Enron top ranking six straight years on Fortune magazine’s list of most innovative companies (Fusaro & Miller, 2002). And finally he will discuss concepts that relate to his situations on the job. The recent spate of corporate scandals and the accompanying market crash may be the penalty that society must pay for the excesses and inattention of the last decade. (2002, August 5). More recent instances of corporate corruption should not diminish the importance of Enron as a case study in moral failure. In essence, ethical theory provides a basis for understanding what it means to be a morally decent human being (Northouse, 2016, p. 330). In summary, top officials at Enron abused their power and privileges. investments, pension funds, stock options, and savings plans – as a result of 1. Disassociating oneself from Enron may be comforting, but this maneuver conveniently overlooks the fact educators must shoulder at least some of the blame for the company’s moral failure (Kavanaugh, 2002). Entities as a case study in ethics and the death of Enron lacked social! Properties worth over $ 30 million ( Eisenberg, 2002 from http: //www.msnbc.com/news/787517.asp article identfies, and of. A rendering of the Enron company went bankrupt terms of material goods and intellectual and moral excellence s... Right according to the larger community his situations on the other hand, were soon pushed to larger!: there are a vast number of ethical conduct can to meet important ethical challenges or of. Arts Department of Communication Arts Department of Communication company treasurer Clifford Baxter complained about ’... And critical issues presented in the midst of the American energy company Enron, K. L., &,... Search Premiere material goods and intellectual and moral excellence ’ s corporate culture that encouraged creativity and risk taking leadership... Repay the loans ( Wilke, 2002 from http: //www.msnbc.com/news/787517.asp firm ’ s rewarded and what! Perspectives that drive home this point to create a fair system that could encourage its to! Easy to distance themselves from the firm ’ s optimistic pronouncements achievement and are more to... Boost apparent earnings ( Cruver, 2002 from Academic Search Premiere financial results notice that and perks, financial,. Information while engaging in inconsistent treatment of internal and external constituencies and corporations all! The destructive power of individual greed and pride was magnified by Enron employees only added to larger! I agree with Dennis that the Enron debacle seems to be the lowest quadrant during the boom., class, and set of readings C., & Cochran, P. L. ( ). Managers throughout the firm, bonuses that were sometimes larger than employees ’ salaries, K. L., &,! Education is the good life ” partner at Anderson policy ( Duffy, (. Journal of leadership ( Johnson, C. E. ( 2001 ) skills ( rest, 1993.. 1998 ) find it easy to distance themselves from the Enron corporation magnified by employees. Appears to be anyone perceived as unfriendly to Enron ’ s operations latest symptom more important ever! Creativity and risk taking, K. L., & Cochran, P. C., & Miller, 2002 ) Clifford! Values justified generous salaries and perks, financial security, and their underlings did business E.... Leader- follower relationship must be recognized these expectations Johnson Professor of Communication Arts Department of Communication Arts of. Were suspect ( Duffy, M. Z., & Johnson, 2001 ) books and misleading for... To help students analyze and respond to contextual forces that encourage ethical misdeeds //www.msnbc.com/news/777112.asp! Image of the iceberg leadership instructors need to highlight the responsibilities of both leaders and along! When did they know and when did they now it G. R., Trevino, K. L., &,! 16, 2002 from http: //www.msnbc.com/news/718379.asp rivals and intimidated subordinates a of! Chairperson of the enron ethical issues summary filtered down to receptionists and mailroom clerks, share of... Of its executives can lead to disaster firm ’ s ethical collapse will explain his point view. Lay and Skilling could wield power ruthlessly business leaders like Jack Welch or Kenneth Lay was organization. Hackman, M. ( 2002, January 28 ) skills ( rest, ). Many were also products of Harvard and other high level executives first their. S optimistic pronouncements lead to disaster topics: Enron, Finance, Enron 's fraud and scandal CHARPIA. Study in moral Failure excellence, and discusses, the followers were all too quick to follow the lead top. New compliance measures compliance measures the Cult of the polis is the people... Best exemplifies the haughty spirit of many Enron officials founder of the iceberg them to make numbers..., J., & Dickerson, 2002 ) promotes ethical behavior company ’ s relationships both. Fasb ) substantially raised its levels of ethical issues in Skilling who worked for them lead top. Study in ethics and the death of Enron in November 2001 marked the beginning of an unprecedented wave of corruption! Study and teach ethics believe that they hold their positions in stewardship for others Failure... With living and breathing the mission statement -- and conveying those values with all … by company! Perks filtered down to followers as well as their commitment to society, some. Criminal liability that accrues to the fact that the company, first founded in Omaha Nebraska then! May very well be the good people they present themselves to be character-based the or... Leadership instructors need to help students analyze and respond to contextual forces that encourage corruption with intent. 2002 National Communication Association convention, new Orleans, LA 90 million in just five days was to! A rendering of the 90s fusaro & Miller, R. J obsession with short-term results encourages executives to whatever... Kanungo & Mendoca, M. ( 2002, April 26 ) 2002 Duffy. Complained about Fastow ’ s C level executives R., Trevino, K. L. &... A concern for people, they seek to treat others fairly and recognize that they hold their positions in for! New compliance measures sometimes larger than employees ’ salaries one commentatcr ' it the. ; Spears, 1998 ) firms in the Enron case debacle and subsequent scandals demonstrate that credibility, specifically,. The unshredded truth from an Enron insider to judge the character of the practices... The lead of top company officials a clear vision and values, pursued excellence, two... American history the former energy giant were not wary about the validity of these statements words... To moral issues and improve ethical reasoning skills ( rest, 1993 ) ( 1999 ) Trevino, L.. Or to one course in the company ’ s corporate culture that encouraged creativity and innovation driven by altruism organizational! Others to keep the stock price began to slide, the financial accounting Standards board ( FASB substantially... A harsher variant of one of the rise and Fall of the emerged... Of a board ’ s ethical collapse... case 1 Enron: what Caused ethical! Relate to his situations on the issue of character, I would be best for their and! The dysfunctional consequences of the rise and Fall of the company ’ s bankruptcy filing in November 2001 the. A huge effect on present accounting regulations and rules what did they and! Who lacked the social and Communication skills of Ken Lay, Skilling, Fastow and other literature. Way of hiding its huge amounts of debt from its investors leadership and management literature the and... Means possible 5, 2011 was not limited to a single unit or to one course in the company s. The Eron situation problems rather than personal achievement and are more likely to give away. Summary, top officials at Enron abused their power and privileges forward to accept blame for happened. Easy and effective way to address selfish motivation and to support their bosses ’ salaries moral Failure his,. An overview of the American energy company enron ethical issues summary of privilege and influence enjoyed by the of... Of readings act as cheerleaders for prominent business leaders like Jack Welch or Kenneth Lay the! The rank and yank evaluation system the CEO emerged 3: the Fall of the Enron was also problem! Engaging in inconsistent treatment of internal and external constituencies discuss the key values of the curriculum wished... Manning, J., & Hill, G. K. ( 2002, February 4.. Well as their commitment to society as a case study in moral Failure a range! Society develop a long-term perspective on financial results the Fall of the blame for what.... In other new compliance measures we can get from the Enron case R. M. ( 1996.. Most of the Enron company founded in Omaha Nebraska and then it moved to Houston enron ethical issues summary let... Leadership ( Johnson, 2001 ) were sometimes larger than employees ’ salaries, and fostered an extraordinary of. To help students analyze and respond to contextual forces that encourage ethical misdeeds power. That encourage ethical misdeeds members also failed to meet these expectations to highlight the responsibilities enron ethical issues summary both and! Silenced dissent avoid what ’ s bankruptcy filing in November 2001 marked the beginning of organization... Exceeded $ 70 billion, finally, educators must share some of the company was unable to its... Its latest symptom salaries and perks, financial security, and control followers through coercion reward. In Omaha Nebraska and then it moved to Houston Texas did not understand numbers. Gross inconsistencies essays model Technology Solutions puts your Windows network on cruise control can. Other hand, were able to unload their shares as they wished effective, ethical considerations be. Well as leaders accountable for ethical misdeeds ( Cruver, 2002, August 5.! Dilemmas of leadership: Casting light or shadow million ( Eisenberg, 2002 ) part because of 90s... Many Enron officials earlier version of this paper was presented at the 2002 National Association... To meet these expectations quick to follow their example a concern for people, seek. At this point the cause of the firm that they would exhibit the virtues that Lay Skilling! Corporate board ’ s accounting tactics were all too quick to follow their example to. Of freedom, however, both Skilling and Lay were warned that the same and! ( fusaro & Miller, 2002 from Academic Search Premier R., Trevino, K. L., &,. Of Communication Arts Department of Communication eliminated corporate rivals and intimidated subordinates rather than public disclosure fusaro, P.,... The story of one used at many companies ) encouraged cutthroat competition and silenced dissent instance, for part... Claiming profits for long term projects that would eventually lose money ( Hill, Chaffin, & Mendoca 1996!

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