To Complete This Discussion, Please Base Your Work On Enron ✓ Solved

To complete this discussion, please base your work on Enron

To complete this discussion, please base your work on Enron, WorldCom, or another white collar crime story of your choosing. Name the company you selected and briefly summarize the crime. Do you think that the CEOs and other corporate officers involved were justly held criminally responsible or not? Explain your perspective. Do you believe that business can regulate itself to act ethically, or is government oversight a necessity to protect the public from financial wrongdoing? Explain your position.

Paper For Above Instructions

The corporate scandals of the early 2000s fundamentally changed the landscape of American business ethics and regulatory practices, with Enron and WorldCom serving as prime examples of white-collar crime that resulted in significant financial and societal repercussions. This paper will focus on Enron Corporation, a company that, at its peak, was considered a powerhouse in the energy sector but ultimately became synonymous with corporate fraud. The profound implications of the Enron scandal not only led to the downfall of the company but also prompted legislative changes designed to enhance corporate accountability.

Overview of the Enron Scandal

Enron, once heralded as one of the most innovative companies in America, was involved in a massive accounting fraud that ultimately led to its bankruptcy in December 2001. The company engaged in accounting practices that included the use of special purpose entities (SPEs) to conceal its debt and inflate profits. This manipulation was facilitated by accounting firms such as Arthur Andersen, which helped Enron cover up its financial problems by issuing misleading financial statements (Healy & Palepu, 2003).

The fraudulent activities of Enron were primarily orchestrated by its top executives, including CEO Jeffrey Skilling and Chairman Kenneth Lay. They misled investors and employees about the company's financial health while selling their own shares, resulting in enormous financial losses for investors and thousands of employees losing their jobs and savings when the company collapsed (McLean & Elkind, 2003).

Accountability of Corporate Executives

In the aftermath of the Enron scandal, several executives, including Lay and Skilling, were prosecuted and convicted for their roles in the fraud. Lay died before his sentencing, but Skilling was sentenced to 24 years in prison, later reduced to 14 years (Sullivan, 2009). From my perspective, these individuals were justly held criminally responsible for their actions. They not only engaged in deceptive practices but also created a culture of dishonesty within the organization that misled employees and shareholders alike. Their actions represented a gross breach of the trust placed in them by the public and their investors.

The Role of Government Oversight

This raises a critical question about whether businesses can effectively regulate themselves or if government oversight is necessary to prevent such egregious misconduct. I believe that while ethical business practices can be promoted within organizations, self-regulation alone is insufficient. The Enron case demonstrates that without external oversight, corporations may prioritize profits over ethical considerations. Government regulation, such as the Sarbanes-Oxley Act passed in response to Enron and other scandals, provides essential checks and balances that aim to ensure transparency and accountability in corporate governance (Cohen, Holderness, & Poor, 2010).

Self-regulation is often limited by conflicts of interest and may fail to address inherent systemic issues. For example, companies may engage in accounting practices that, while legally permissible, are ethically questionable. Organizations typically aim to maximize profit, which may undermine ethical decision-making (Kaplan, 2004). This suggests that some level of external oversight is necessary to protect stakeholders and ensure fair practices within the corporate environment.

Conclusion

In conclusion, the Enron scandal serves as a cautionary tale about the dangers of corporate greed and the importance of accountability in business. The executives involved were rightly held responsible for their actions, highlighting the need for ethical corporate governance. While businesses may strive for ethical conduct, the complex nature of corporate operations necessitates government oversight to safeguard the public and maintain trust in the financial markets. A robust regulatory framework, alongside a commitment to ethical practices from within companies, is essential to prevent future corporate malfeasance.

References

  • Cohen, L. E., Holderness, C. G., & Poor, S. (2010). A History of Financial Regulation in the U.S. The Journal of Finance, 65(5), 1869-1893.
  • Healy, P. M., & Palepu, K. G. (2003). The Fall of Enron. Journal of Economic Perspectives, 17(2), 3-26.
  • Kaplan, R. S. (2004). Business Practices, Corporate Governance, and the Future of the American Corporation. Harvard Business Review.
  • McLean, B., & Elkind, P. (2003). The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron. Penguin Group.
  • Sullivan, M. (2009). The Enron Scandal: The Criminal Conviction of Jeffrey Skilling. American Criminal Law Review, 46(4), 1147-1160.
  • Healy, P. M., & Palepu, K. G. (2003). The Fall of Enron. Journal of Economic Perspectives, 17(2), 3-26.
  • Schilit, H. M. (2002). Detecting Earnings Manipulation. Financial Times Prentice Hall.
  • Wells, J. T. (2005). Principles of Fraud Examination. John Wiley & Sons.
  • Friedrichs, D. O. (2009). Trusted Criminals: White Collar Crime in Contemporary Society. Cengage Learning.
  • Carson, T. L. (2010). Business Ethics and the Role of Government. Business Ethics Quarterly, 20(1), 81-100.