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Enron Case Study

Autor:   •  April 29, 2013  •  Case Study  •  458 Words (2 Pages)  •  4,805 Views

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1. . How did the corporate culture of Enron contribute to its bankruptcy?

- People describe Enron’s corporate culture as arrogant and prideful. The company employed the best and brightest graduates from top universities, as well as competent, creative and hardworking employees. However, Enron’s compensation plan was more focused on generating profits for shareholders than on enriching employee’s wealth, which resulted in a highly competent and aggressive culture. Enron’s corporate culture encouraged risky behavior, if not breaking the rules. Also, Skilling develop a system in which the employees were ranked every six months. As a result, the employees could not deliver bad news because that could result in the “death” of the messenger, so the problems in the trading operations were hidden instead of being communicated to the management. The business ethic issue is that Lay (CEO) lied about the financial condition of the company and some employees knew about it and just ignored it.

2. Did Enron's bankers, auditors, and attorneys contribute to Enron's demise? If so, what was their contribution?

- Yes. Enron’s attorneys like Venson and Elkins, the investment bank Merry Lynch, and the audit company Arthur Andersen contributed to Enron’s fall. First, Enron was Venson and Elkins top client. This law firm helped structure some of Enron’s special purpose partnerships. There was a letter directed to Enron’s CEO that indicated that the law firm supported the legality of some of Enron’s deals. Second, the brokerage and investment bank Merry Lynch bought Nigerian barges for $28 million and Enron financed $21 million. It was said that Enron was going to buy Merry Lynch investment out in six months with a 15% rate of return. However, there was a document that indicated that the transaction might not be appropriate. Finally, Arthur Andersen, as Enron’s auditor, was

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