Enron Week 3 Case Study

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Enron: Questionable Accounting Leads to Collapse Week 3 Case Study Jama Eddleman Mid-Continent University CHM 6003 Christian Leadership in a World of Business Professor: A. McClurg March 30, 2013 Enron: Questionable Accounting Leads to Collapse In this paper, I will apply three of Maxwell’s Laws of Leadership to the Enron case study. The laws I will discuss are: the Law of Respect, the Law of Intuition, and the Law of Magnetism (Maxwell, 2007). This case is about the failure of accountability and leadership that led to the downfall of the Enron Corporation. The study is taken from the 8th edition of Business Ethics (Ferrell, Fraedrich, & Ferrell, 2011, p. 336). The Collapse of Enron Once a Fortune 500 company, Enron was forced to file bankruptcy in 2001. The bankruptcy action stemmed from the realization that Enron’s financial records were riddled with inaccuracies and other arrangements that were off-the-records. It is apparent that all of the higher-ups at Enron were out to make more money for themselves without real thought to the consequences or effects that their collective actions and illegal activities would cause. When news of the accounting discrepancies and possible illegal activity became known, the company’s stock plummeted. This led to Enron laying off thousands and shareholders losing billions (Ferrell et al., 2011). The Law of Respect Enron employees respected the company’s executives. Enron was a top company showing huge profits. In the end, however, we found that Enron’s executives abused this respect. The top executives were found guilty of crimes such as fraud and conspiracy. Instead of conducting business in an honest fashion, the executives were out to make the most money for themselves. This contradicts Maxwell’s Law of Respect since the executives did not show respect for others, did not have the courage to
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