The Unethical Behavior of Enron

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The Unethical Behavior of Enron

By | October 2008
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The Unethical Behavior of Enron

Enron, once the countries seventh-largest company according to the Fortune 500, is a good example of how greed and the desire for success can transform into unethical behavior. Good ethics in business would be to compete fairly and honestly, to communicate truthfully and to not cause harm to others. These are things that Enron did not seem to display, which led to Enron’s operations file for bankruptcy in 2001.

Enron’s scandal has become one of the most talked about forms of unethical business behaviors. The company’s collapse resulted from the disclosure that it had reported false profits, used accounting methods that failed to follow generally accepted procedures. Both internal and external controls failed to detect the financial losses disguised as profits for a number of years. Enron’s managers and executives retired or sold their company stock before its price went down. Enron employees lost their jobs and most of their retirement savings invested in Enron stock.

Enron’s dishonesty and misleading business ethics unfolded when a Fortune article made people wonder whether Enron’s stock was overpriced. Enron’s executives were later charged with fraud, money laundering and conspiracy. Other companies, such as Arthur Anderson, Citigroup, and Merrill Lynch, also played roles in Enron’s scandal.

To make a long story short, even though a business main goal is to make money, it pays to practice good ethics. Making money is not wrong in itself. It is the manner in which some businesses conduct themselves that brings up the question of ethical behavior.

References:
Bovee, C., Thill, J., & Mescon, M.(2007). Excellence in Business. Upper Saddle River, NJ: Prentice Hall. Enron Fraud InfoCenter [Data file]. Retrieved from
http://www.enronfraudinfocenter.com/information.php
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