Enron Collapse Essay

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Assignment 2: Enron Case Study Abderazak Ouassou Texas A&M University – Commerce Assignment 2: Enron Case Study 1. Identify the likely causes of Enron’s failure and which parties were most responsible? Enron’s failure was caused by many environmental elements in addition to wrong and unethical decisions of its management. The deregulation of the energy industry was a major element that allowed companies to have access to a wider range of manoeuvres. Arthur Andersen which had been Enron’s auditor since its formation in 1985 had warned the board of directors many times about the suspicious nature of many transactions and the extensive risk that some of these transactions represented. In addition, the poor control and the influence of Skilling regarding trading futures on the delivery of gas had led Enron to bankruptcy. Skilling’s confidence on the his risky strategy drove the firm to its grave, especially with September eleven crisis that lead many shareholders to cash their short term securities and trigger the Enron collapse. Moreover, as auditors, Andersen had failed to address the issue to the board of directors and to the overruling authorities. Furthermore, the method used in the transaction was also innovative and used the different voids in the regulatory system to commit unethical financial and business transactions. 2. Identify all the people who were harmed by Enron’s collapse and explain the ways in which they were harmed. The Enron collapse has affected many parties. The most harmed people are the employees. They were not only dismissed after the collapse but also all their saving and retirement plan were very tie to Enron shares system. Thus they ended up completely empty handed. The shareholders have been severely affected also losing all their important investments. 3. Which of Enron’s actions violated the law? Enron never

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