Enron: An American Accounting Scandal
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Abstract
Enron, a budding company of the 1990's seemed to have everything going for it. Touted by Wall Street analysts as the next blockbuster company that would generate hundreds of millions of dollars in earnings. By creating an innovative energy trading platform, Enron rocketed to the top of their industry. Just as things were starting to peak, the greed of needing to outperform their own previous earnings, Enron stretched their investments to the limits and then created an elaborate accounting scheme to hide the losses. Specifically, mark to market and special purpose entities became the two "drugs of choice" used to hide substantial losses from their balance sheets and inflate their earnings. Eventually Enron's circle game ended with criminal convictions for many and the accounting profession was faced with taking a hard look at where there standards went wrong.
Greed
"Successful people are always looking for opportunities to help others.
Enron Downfall
English: Enron Complex in Houston Texas
English: Minute Maid Park (Enron Field) was built ...Unsuccessful people are always asking, "What's in it for me?" (Tracy, 2001) In the 1990's an emerging way to do business, based in the virtual world of the internet, was building to enormous proportions. One such business, Enron, was taking full advantage of these new and exciting, not to mention uncharted business opportunities. Enron was an energy company created in 1985 with the merging of Houston Natural Gas and InterNorth. Ken Lay, the then CEO of the Houston based gas company retained his title with the newly formed Enron. Mr. Lay was a pioneer of sorts during this time of American history when corporate America was fighting to deregulate the Energy business at the state level. More specifically Mr. Lay had his eye on California. His efforts along with others in the fight led to this state's deregulation of energy in 1996. The vision...