FALL OF ENRON
CASE STUDY. my personal point of view..
3. IF ALL PUBLICLY TRADED FIRMS ARE OPERATING WITHIN THE SAME BASIC CORPORATE GOVERNANCE SYSTEM AS "ENRON", WHY WOULD SOME PEOPLE BELIEVE THIS WAS AN ISOLATED INCIDENT, AND NOT AN EXAMPLE OF MANY FAILURES TO COME?
The answer to this question lies within the minds of the Enron Managers rather than with the business environment. Most likely, these managers are well-educated and may have come from rich families. If this is so, then the logical thing to do is not to destroy their reputation or If they did something illegal, they should have limited their actions to a controllable level and thought of a lasting solution instead of temporary ones.
The normal person, even those with criminal minds, would only execute a crime, if he knows that there is a chance that he will not get caught. In the case of Enron, they knew that eventually they will get caught even if they cover up their illegal acts. This is because the extent of their actions covered almost all businesses in the United States and other parts of the world. The normal thing to do was to limit the extent of the crime and to put it in a manageable level. But here, they did not care what happens as long as they solve the problem of the present. They were not thinking about the future. That is why the solutions they thought of were only temporary. The Balance Sheet manipulations and the putting up of SPEs were only temporary solutions because they cannot tamper with their balance sheet and pass on their losses to the SPEs without these being found out later on. Once a company gets public attention because of its success, they will be subject to public scrutiny.
In sum, the reason why some people believe that this was an isolated incident is because Enron did not think and act logically as what to be expected of well-educated and experienced managers. They knew their strategy of system manipulation was not the solution to their problems but they still continued
3. IF ALL PUBLICLY TRADED FIRMS ARE OPERATING WITHIN THE SAME BASIC CORPORATE GOVERNANCE SYSTEM AS "ENRON", WHY WOULD SOME PEOPLE BELIEVE THIS WAS AN ISOLATED INCIDENT, AND NOT AN EXAMPLE OF MANY FAILURES TO COME?
The answer to this question lies within the minds of the Enron Managers rather than with the business environment. Most likely, these managers are well-educated and may have come from rich families. If this is so, then the logical thing to do is not to destroy their reputation or If they did something illegal, they should have limited their actions to a controllable level and thought of a lasting solution instead of temporary ones.
The normal person, even those with criminal minds, would only execute a crime, if he knows that there is a chance that he will not get caught. In the case of Enron, they knew that eventually they will get caught even if they cover up their illegal acts. This is because the extent of their actions covered almost all businesses in the United States and other parts of the world. The normal thing to do was to limit the extent of the crime and to put it in a manageable level. But here, they did not care what happens as long as they solve the problem of the present. They were not thinking about the future. That is why the solutions they thought of were only temporary. The Balance Sheet manipulations and the putting up of SPEs were only temporary solutions because they cannot tamper with their balance sheet and pass on their losses to the SPEs without these being found out later on. Once a company gets public attention because of its success, they will be subject to public scrutiny.
In sum, the reason why some people believe that this was an isolated incident is because Enron did not think and act logically as what to be expected of well-educated and experienced managers. They knew their strategy of system manipulation was not the solution to their problems but they still continued