Enron Scandal

The overall cause for Enron’s bankruptcy should be blamed on former chairman and CEO, Kenneth Lay. As an Enron executive, all of Lay’s concerns should have been focused on Enron’s profits, but all he cared about was his property. When he noticed Enron’s financial problem, he did not attempt to fix it, but made effort to maintain his own benefit and ignored the whole company’s and investors’ loss. His selfish and unethical behavior not only deceived the investors but also finally resulted in Enron’s bankruptcy. In addition to crippling investor confidence and provoking questions about the sustainability of a deregulated energy market, Enron’s collapse has precipitated a complete reevaluation of both the accounting industry and many aspects of corporate governance in America. As a result of the scandal, thousands of people lost their jobs, some people lost their entire pensions, and all of the shareholders lost the money that they had invested in the corporation after it went bankrupt.
The Enron scandal is the most significant corporate collapse in the United States since the failure of many savings and loan banks during the 1980s. This scandal demonstrates the need for significant reforms in accounting and corporate governance in the United States, as well as for a close look at the ethical quality of the culture of business generally and of business corporations in the United States. Boards of directors need to pay closer attention to the behavior of management and the way the company is making money. In too many American companies, board members are expected to approve what management proposes-or to resign. It must become acceptable and mandatory to question management closely. There is little chance the U.S. governance rules will be changed to make boards responsible to the employees as well as to the shareholders. However, board members would be foolish not to pay more attention to how employees and customers and business partners are treated. These greatly