The Reason Enron Fell

1044 Words5 Pages
Enron was a company that claimed nearly 101 billion dollars in revenue in 2000. By the end of 2001, it was revealed that Enron had some very creative accounting procedures that inflated those revenues. Enron fell for bad accounting practices, poor organizational-behaviors, lack of leadership, and misguided management. Bad accounting practices were the beginning and poor organizational-behavior was the end. Creative Accounting Accounting practices by Enron could be considered nothing less than creative. Enron managed to cause the California energy crisis and inflate energy costs to benefit the company’s bottom line. Further, Enron’s accounting practices changed public opinion on the dealings of corporate America. “A continual stream of revelations about Enron's deceptive financial reporting has played a decisive role in making investors wary of corporate accounting and the stock market,” (Mandel & Zellner, 2002). Investors no longer had trust in financial or accounting records and reports. Organizational-Behavior Enron believed that it could motivate the company’s employee with money and only money. The company spent money on gifts such as expensive crystal gifts on Secretaries Day, throwing picnics at an amusement park, and spending 1.5 million on a Christmas party. Enron hired live elephants for company parties, ordered sports utility limos for luncheons, and gave away free laptops just because. Enron is the “poster child for bad corporate behavior” (Steinauer & Casison, 2002). Enron’s over-the-top antics were put in motion to motivate the employees when all it did was help bring the company down. Lack of Leadership Sherron Watkins will forever be known as the whistle blower at Enron. Too bad her warnings were never heeded. She testified before Congress that she tried to warn Chief Executive Officer Ken Lay about the accounting practices. She wrote a memo

More about The Reason Enron Fell

Open Document