Managerial Ethics: The Case of Enron The recor

The record bankruptcy of giant energy firm Enron was a landmark failure of corporate governance, a failure shared by corporate officers, the Arthur Andersen auditing firm responsible for verifying the accuracy of EnronÆs financial statements, and ultimately of the governmental regulatory agencies that are charged with ensuring that corporations report financial data in an appropriate manner (Enron a case studyà, 2002). Altogether, Enron shareholders and its employeesÆ retirement accounts lost more than $75 billion; additionally, revelations of fiduciary malfeasance included information regarding multimillion-dollar profits realized by the firmÆs Chief Financial Officer via management of several limited partnerships and substantial sums paid out to family members of the Chief Executive Officer (Verschoor, 2002). Overall, in the opinion of this writer, examining the case of Enron from an ethical perspective is necessary to first identify ôwhat went wrongö and second to determine what must be done to prevent similar cases from occurring in the future.

The research hypothesis to be explored herein via a qualitative, narrative study methodology is stated as: EnronÆs ethical failure was based in part on a deliberate failure to follow the rules of accounting and auditing practices that govern corporate financial reporting and in part on the fact that some of EnronÆs actions were essentially legal, if not either sensible or ethical. Indee

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and stock prices. In essence, Enron executives and their lawyers and accountants lied to the public and the firmÆs investors about how well the firm was doing, using highly questionable and in some cases outright illegal accounting and book-keeping methods to paint a portrait of a firm that was doing very well when, in fact, the reverse was true (Chaffin & Michaels, 2003). Thus, ôwhat happenedö was linked to improper accounting practices as well as the sale of millions in stock options by the firmÆs executives along with artificial manipulation of company financials to deceive investors for as long as possible (Schmollinger, 2003). With respect to whether markets could or would not detect the problem, Chaffin and Michaels (2003) stated that banks and institutional investors have tended to accept as legitimate and accurate the accounting statements of once-prestigious firms such as Arthur Andersen. When a firm such as Enron looks to be in excellent condition, markets respond positively; only when signs of problems emerge do markets begin to back away from a firm. Additionally, Piller (2003) suggests that the Securities and Exchange Commission (SEC) and other federal regulatory agencies have not had sufficient authority
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Some common words found in the essay are:
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Approximate Word count = 2419
Approximate Pages = 10 (250 words per page)