Enron
Enron was a business conglomerate during the 1990s, formed by the merger of smaller oil and energy companies. Houston executives Kenneth Lay (Chairman), Jeffrey Skilling (chief executive officer (CEO) and Andrew Fastow (chief financial officer (CFO) parlayed their new mega-company into a favorite Wall Street company, bragging of record profits with negligible losses. During the 1990s, the three senior executives changed Enron from a traditional gas and electricity company into a $150 billion energy corporation. For instance, from 1998 to 2000 only, Enron's returns rose from approximately $31 billion to over $100 billion, making the company to be the seventh biggest conglomerate of the Fortune 500. Unidentified to nearly everybody, this picture was the result of one of the largest swindles in financial history (Ferrell, Fraedrich & Ferrell, 2013).
One of the key issues presented in the case was the shell game. Not every person knows this, but prices of stock are based on how flourishing a company appears, not the amount of money it has in the bank.
United States Secretary of the Army
English: Enron Complex in Houston Texas
English: Mug shot of Kenneth Lay.Enron's top executives, helped by appropriate deregulation of the power-utility industry, spin this dodge into a gold mine. They apparently posted profits founded on how much a particular business enterprise could generate, not how much it was essentially worth, and covered losses through offshore "shell" companies. The company's accounting firm, Arthur Andersen LLP, was mature and well esteemed; not even a single person supposed it would take part in corporate swindle, making Enron appear virtuous (Ferrell, Fraedrich & Ferrell, 2013). Enron executives submitted an application for and were consequently awarded government deregulation. Because of this pronouncement of deregulation, Enron executives were allowed to uphold agency over the income reports that were discharged to employees and investors alike. This agency let Enron's gross reports to be tremendously distorted in nature; the...