RUNNING: Demise of Enron Corporation® and WorldCom®
Demise of Enron Corporation® and WorldCom®
October 31st, 2012
Enron Corporation and WorldCom
In the last decade, two powerful American companies, Enron Corporation and WorldCom, have become the models of accounting corporate fraud. The Enron Corporation was founded in 1985 by Kenneth Law in Omaha, Nebraska. The company later moved its operation to Houston Texas when InterNorth and Houston Natural Gas merged. This American organization offered paper, pulp, electric, communication, and natural gas manufacturing. Enron employed over 20,000 professionals and reported earnings worth over 100 billion ...view middle of the document...
When the profit came back empty, Enron and WorldCom were unable to pay its employees back leading to one of the biggest financial scandals in United States financial history. Another contributing factor to the demise of these two powerful companies was “creative accounting.” Both companies overstated revenues, profits, misused funds, under estimated expenses, and over stated profit. In addition, to providing investor with misleading information, high ranking individuals were showering in bonuses, and massive kickbacks. Both companies engaged in unethical practices to enhance balance sheets, appear more profitable to investors, and disguise the deep financial trouble. In turn, investors would continue to support and provide more capital which only deepened the misuse of funds.
Role of Business Ethics in Strategic Financial Planning
The lack of business ethics of top executives many companies to bankruptcy have ended in bankruptcy, shame, infamous demise, and most importantly the loss of thousands of jobs. In today’s society the role of business ethics in strategic financial planning has become a primary key to businesses success. In fact, the United States of America had to...