Enron Revision.docx - Enron Stakeholders - Stockholders ...

Enron
Stakeholders
-
Stockholders [Investors lost $70 billion in market value in 2001, 401(k) retirement
plans in company stock all lost]
-
Employees [4,000 laid off immediately]
-
Customers & Suppliers [Lost contracts]
-
Creditors [JP Morgan Chase & Citigroup]
-
Government [Lost of tax revenue, people lost confidence in the government, assume
cost of prosecuting corporate law-breaking]
-
Community [Town of Houston suffered social costs such as unemployment, declining
tax revenue, damaged reputation and charitable donations]
-
Public [Lost confidence in businesses]
-
Business support groups [Arthur Andersen forced out of business, increasing
unemployment of employees as well as business partners around the world] [Vinson
& Elkins, external law firm suffered damage to reputation]
-
Media [Faulted for not catching Enron story earlier, only Fortune benefited from
prescient reporting (foreknowledge of the situation)]
Causes for the downfall of Enron
Internal
- Corporate governance
 Oversight by board of directors especially in its audit and compliance
committee
 Compensation committee issued outsized executive pays and stock options by
keeping high stock prices
 Allowed company to assume large debts that could not be supported by its