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Enron: Questionable Accounting Leads to Collapse Caleb Simpson Case Assignment 2 February 22, 2016 BUSI 472: B01 Introduction Enron Corporation, an American energy, electricity, and communications company from Houston, Texas was founded in 1985 and shortly after became one of the top corporations in America. The Enron Corporation was created out of the merger of two major gas pipeline companies and through its subsidiaries and numerous affiliates, provided products and services
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Enron: Questionable Accounting Leads to Collapse related to natural gas, electricity, and communications for its wholesale and retail customers (Ferrell). Not long after its creation, Enron became a force to be reckon with in the energy business. In 1998, Enron became a Wall-Street favorite with revenues growing from about $31 billion to more than $100 billion in two short years making it the seventh-largest company in the Fortune 500. However, things on the inside weren’t the way it seemed on the outside. Chairman Ken Lay and CEO Jeffrey Skilling promoted a culture that many described as arrogant. Skilling and other executives believed Enron was “The World’s Leading Company” and even place a large banner stating that phrase in the lobby at corporate headquarters. Enron promoted a culture that encouraged the pursuit of profit even if that meant disregarding rules and regulations. Skilling and the rest of the top management were more concerned with generating wealth for them than they were in creating a corporation and culture that was ethical and honorable. The culture rewarded high performance and fired the employees they considered to be weak links. Because of this prideful culture and the pursuit for greed and wealth, Enron became, at the time, the largest bankruptcy filed in U.S corporate history. Enron shares were worth $90.75 at their peak in August 2000 but dropped to $0.67 in January 2002 (CNN). Investor confidence fell and Enron’s stock fell with it. With 22,000 claims totaling about $400 billion, Enron destroyed themselves from the inside because of the corporate culture it created, the auditors and attorneys they partnered with, and the fraudulent efforts of top managers such as CFO Andrew Fastow, CEO Jeffrey Skilling, and Chair Ken Lay.
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Enron: Questionable Accounting Leads to Collapse Enron’s Corporate Culture
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