International Law and Business

International Law and Business

Introduction

The following essay is concerned with the critical analysis of the organizational culture that led to the debacle of Enron Corporation. For the purpose of this essay, we chose a case titled 'Enron Ethics. This paper sums up the events, attitudes and organizational behaviors that may lead to the collapse of Enron Corporation. The study is related to the Enron Scandal which has impacted various stake holders as the acts or policies that were being implemented, or followed by the Enron Corporation was to get profits from illegitimate means.

Moreover, due to this scandal of Enron Corporation, the leadership of Enron Corporation was held liable for the acts or policies of the company as due to these the economy got affected.

Culture History of Enron

Enron Corporation signifies the extremes of an organization working in a global context and capitalist economy. It was regarded to represent as one of the best 21st Century organizations in terms of economical and ethical. Within less than a year, the firm departed from being a sign of “the most innovative company” model of ethics, social responsibility, and success. These qualities were replaced by failure indicators like greed, mismanagement and deception

Deregulation in the power sector permitted Enron to act as a match maker which eventually brings sellers and buyers at the same platform. Enron made profits from exchanges, and from the differences in the prices of buyers and sellers. The same deregulation let Enron to be innovative and creative. With the passage of time, Enron's contract's turned out to be increasingly diverse and drastically more complex and complicated. The firm's culture developed and progressed along with its product and services.

The Ultimate Debacle

The Enron Company had been one of the most successful companies in the world. The scandal at Enron involved the highest levels of leadership, to include the CEO. The debacle of Enron is the cause of the fraud and manipulation; as internally, Enron created more than 3,000 offshore companies. The primary goal of these companies was to enable investors to co-finance infrastructure to make profitable long through securitization. These companies also allowed outsourcing certain risks of the parent company to avoid putting at risk.

Enron used these non-consolidated companies for these purposes and later out of the assets or liabilities. These companies, whose headquarters located in the Cayman Islands, the Bermuda or the Bahamas, making the stock more presentable; however, summary information on these subsidiaries specified in notes at the bottom of page of financial information documents (Nelson et. el, 1999). The company simultaneously pursuing a policy of assertive communication; thus, the charismatic chairman Kenneth Lay sent a letter to employees announcing that he thought the share price gain 800 % before 2010.

Effect of Accounting

The Enron case was the main trigger in the development of the law Sarbanes Oxley, which aims to establish internal control measures more stringent and efficient to prevent publicly traded companies make fraud as happened with Enron cited. For accountants and auditors, the Act requires them to ...