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Case 9: The Collapse of EnronTEACHING NOTE FOR:THE COLLAPSE OF ENRON1This case illustrates the following themes and concepts discussed in the chapters listed:Theme/ConceptChapterStakeholders1Conflict of interest4Corporate culture and ethical climates5Accounting ethics5Ethical safeguards5Government regulation and deregulation8Business as a political participant9Political action tactics9High-technology business13Stockholder rights14Corporate governance14Executive compensation and stock options14Government protection of stockholder interests14Whistle-blowing16TEACHING TIP: VIDEO“Enron: The Smartest Guys in the Room” may be used with this case. This 110-minutedocumentary by Alex Gibney is available for sale in DVD format from various commercial sources. Amazon.com describes the film this way: “Based on the best-selling book of the same name by Fortune reporters Bethany McLean and Peter Elkind, a multidimensional study of one of the biggest business scandals in American history. The chronicle takes a look at one of the greatest corporate disasters in history, in which top executives from the 7th largest company in this country walked away with over onebillion dollars, leaving investors and employees with nothing. The film features insider accounts and rare corporate audio and video tapes that reveal colossal personal excessesof the Enron hierarchy and the utter moral vacuum that posed as corporate philosophy. The human drama that unfolds within Enron's walls resembles a Greek tragedy and produces a domino effect that could shape the face of our economy and ethical code foryears to come.” Discussion Questions:1.Who were the key stakeholders involved in, or affected by, the collapse of Enron? How and to what degree were they hurt or helped by the actions of Enron management?
2.Considering all aspects of the case, what factor or factors do you believe most contributed to the collapse of Enron? 3.What steps should be taken now by corporate managers, stakeholders, and policy makers to prevent a similar event from occurring in the future? 1. Who were the key stakeholders involved in, or affected by, the collapse of Enron?