Topics: Enron, Stock market, Corporation Pages: 3 (717 words) Published: November 2, 2013

“A white paper is a government report outlining policy or authoritative report on a major issue. White papers discuss a specific business issue, product, or competitive situation.”

The Aftermath Affects
On December 2, 2001, Enron filled for bankruptcy under chapter 11 of the US banking code. This sudden collapse of one of Fortune 500 largest companies shocked the world. Once the world’s largest energy company, Enron’s scandal became the largest bankruptcy recognition and was attributed as the biggest audit failure in American history. The impact of this downfall was felt within the company and throughout the business world.

As Enron’s stock plunged in value, tens of thousands of employees lost their jobs, most of their retirement savings and 401k investments. “In their testimony before Congress, former Enron employees testified that while they had retired with $700,000 to $2 million in Enron stock, they now had virtually nothing except their social security funds” (Caines, p13). Shareholders lost close to $11 billion when the stock price fell to $1 and investors lost nearly $50 billion in total losses. “To make matters worse, many of these employees were restricted from selling their stock even as the stock price declined in value, while senior officers of the firm were able to sell their Enron stock without similar restrictions.”

The sharp and sudden decline of Enron stock affected everyone, whether you were a former employee or had no connection with the company. Millions of Americans invested their retirement savings in mutual funds because of their reliable performance and relative safety. However, Enron was a member of the Standard and Poors (S&P) 500 index at the time of the downfall. “Because Enron was dropped so late from the S&P 500 Index, many individual investors who invested in index-funds lost money because by the time Enron was dropped from the S&P 500 Index, the stock had lost over 99 percent of its market value” (Sridharan).


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Singh, Saurabh. Business Ethics and Corporate Governance Assignment. Scrib.com/ ethic- issues- at-enron. Web. 15 Feb. 2011. .
Sridharan, Uma V., and W. R. Caines. "American Journal of Business." The Social Impact of Business Failure: Enron 17.2 (2002). Ball State University. Web. 15 Feb. 2011. .
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Turner, Lynn. "Has Accounting World Changed Since Enron? : NPR." News & Analysis, World, US, Music & Arts : NPR. 31 May 2005. Web. 15 Feb. 2011. .
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