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  • Essay / Enron: The Smartest Guys in the Room - 1957

    Enron's journey is quite a phenomenon: from a regional gas pipeline trader to the world's largest energy trader, then back down the hill to bankruptcy and disgrace. In fact, it took Enron 16 years to go from approximately $10 billion in assets to $65 billion in assets, and 24 days to go bankrupt. Enron is also one of the most famous business ethics cases of the century. There are so many things that have gone wrong within the organization, from a personal (prescriptive and psychological approaches), managerial (group norms, reward system, etc.) and organizational (world-class culture) perspective. . This article will focus on business ethics issues at Enron that were raised from the Enron: The Smartest Guys in the Room literature, from cognitive moral development to group norms, etc. Overview of the Enron Scandal The Enron Scandal was a financial scandal involving Enron Corporation and its accounting firm Arthur Andersen, which came to light in late 2001. Many of Enron's recorded assets and profits were inflated or even fraudulent and nonexistent. Debts and losses were placed in "offshore" incorporated entities that were not included in the company's financial statements, and other sophisticated and hidden financial transactions between Enron and its related companies were used to remove unprofitable entities from the company's books. This practice caused their stock prices to rise to new levels, at which point executives began working on inside information and trading Enron stock worth millions of dollars. Enron executives and insiders knew about the offshore accounts that hid the company's losses; however, investors knew nothing about it. When the scandal was revealed, Enron's stock fell from more than $90 to less...... middle of paper ......rd did not pay attention to the employees because most of Leaders in the United States do not consider that their responsibility. They consider themselves as representatives only of shareholders and not employees. But in this specific case, they did not even represent the shareholders well and especially not the employee shareholders. They were the ones who could make decisions, but they placed too much trust in the management team and did not catch their employees doing things right or wrong in time. Conclusion The Enron scandal is the most significant corporate collapse in the United States in a century. This scandal demonstrates the need for significant reforms in accounting and corporate governance in the United States, as well as a close examination of the ethical quality of business culture in general and of commercial corporations in the United States..