Saint Martin’s University Enron Corporation Moral Issues Analysis Paper Hi, I have a group assignment which Am response for two parts, they are Define the
Saint Martin’s University Enron Corporation Moral Issues Analysis Paper Hi, I have a group assignment which Am response for two parts, they are
Define the moral issue or decision. (What is the moral problem facing Sherry?)
Gather all relevant information. (What information do you have about the moral problem?)
This is the background
Enron is an infamous American company, now known best as a cautionary tale for businesses and investors around the world. Before the “Enron Scandal”, however, Enron was a much-admired, innovative and successful energy company. Enron was founded in 1985 in Houston, Texas as a result of the merger of two smaller organizations. Throughout the 1990s, Enron diversified from a domestic energy-producer into an organization that traded and hedged on energy products, invested in overseas infrastructure, and ventured into optic networks and broadband services. By 2000, Enron had 29,000 staff and had experienced massive growth since its founding. Enron seemed to be beating all forecasts, posting quarterly earnings consistently above expectation, quarter after quarter and year after year.
We now know that the way Enron was beating expectations so consistently was through an extensive, institutionalized accounting fraud, involving mark to market accounting and corrupt auditors. Essentially, Enron was reporting the future value of its contracts as current revenues. This made them look a lot better on paper than they really were, as none of that value had actually been realized. Enron also moved its debt into shell companies, manipulating its debt-to-equity ratio to appear much more favorable to investors.
In March 2001, Bethany McLean, a reporter for Fortune, magazine questioned Enron’s success, and alleged that Enron was over-priced. Few took notice. In April 2001, a Wall Street analyst named Richard Grubman expressed frustration that Enron was the only company who did not release a balance sheet with its earning statements. Many more people took notice of this, as Enron’s CEO called Grubman an “asshole” on a recorded conference call. However, there were no serious considerations that Enron was up to no good by the majority of Wall Street and the public.
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