The accounting scandal at Enron which occurred early during the last decade involved the manipulation of accounting rules in order to enrich the company’s executive leadership. Hence, while accounting techniques facilitated the Enron scandal it is more of a tale that is related to the hubris of the firm’s top executives and their deep-seated greed. Evidence that hubris and greed was more of the driving force than the actual manipulation of accounting rules for the Enron scandal is evident in the development of its securities trading business model introduced by its erstwhile CEO Jeffrey Skilling: “Although Jeff Skilling didn't single-handedly create it, that Wall Street–type scene was unthinkable at Enron...before Skilling came to Enron. He had a large impact on Enron's business strategy...”(Fox, 2003, p.77). This high-risk, high-reward trading environment was a novel business model for a company that had originally been a natural gas distribution operator with a series of pipelines.
As Enron began to expand into alternative lines of business such as electrical power generation, electricity trading and even broadband distribution, Enron’s focus on revenues obscured any pretence of corporate ethics. This complete disregard for ethical behaviour on the part of Enron’s executives permeated the entire organization such that most departments and business units became intensely focused on generating revenues that simply could not be sustained. This unethical atmosphere encouraged Enron’s CFO Andrew Fastow to develop some businesses that existed only on paper which he referred to as Raptors but whose technical term is Special Purpose Entities or the SPEs that received so much notoriety in the press (Zulauf & Grierson, 2011). Since these SPEs were essentially off-the-book businesses, it was easy for Fastow to keep hiding Enron’s business losses in these shadow companies. This strategy allowed Enron to keep reporting revenues with little to no acknowledgment of costs...
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