Enron's Collapse Essay

1004 WordsMay 7, 20135 Pages
Enron’s books were almost impenetrable, and the company attacked analysts who questioned the numbers. Enron’s techniques for manipulating the California energy crisis had to be clandestine to work. One device involved creating the appearance of congestion in the California power grid and subsequently getting paid for “moving energy to relieve congestion without actually moving any energy or relieving any congestion” (Oppel, 2002, p. A1). Enron ’ s effort to protect its share price by locking in employees so they couldn’t sell the Enron shares in their retirement accounts, even as the value of the shares plunged, put the interests of senior executives ahead of everyone else ’ s. There will always be temptation whenever gargantuan egos and large sums of money are at stake. Top managers too rarely think or talk about the moral dimension of management and leadership. Porter notes the dearth of such conversation: Some argue Enron’s record-breaking bankruptcy and eventual demise was the result of a lack of ethical corporate behavior attributed, more generally, to capitalism’s inability to check the unmitigated growth of corporate greed. Others believe Enron’s collapse can be traced back to questionable accounting practices such as mark-to-market accounting and the utilization of Special Purpose Entities (SPE’s) to hide financial debt. In other instances, people point toward Enron’s mismanagement of risk and overextension of capital resources, coupled with the stark philosophical differences in management that existed between company leaders, as the primary reasons why the company went bankrupt. Yet, despite these various analyses of why things went wrong, the story of Enron’s rise and fall continues to mystify the general public as well as generate continued interest in what actually happened. From the leadership framework, both trait and transformational

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