The Enron Scandal Essay Example | Topics and Well Written Essays - 2000 words

The Enron Scandal - Essay ExampleThere have been several causes suggested by heterogeneous experts and analysts that actually caused the run offure of the union. Experts have indicated Enron as the biggest audit failure in the American history. The biggest vital force comp whatever in the world quickly collapsed which drew attention on its several economical and commercial aspects (Wilkinson, 2005). For the purpose, this idea shall analyze the case study of Enron scandal. Several management and strategic decisions and policies contributed to the major fall in the US corporate history. The paper shall further analyze the causes of the failure from economic perspectives. Background Enron was established in 1985, and it was genius of the leading seven American faculty companies. It was one of the worlds leading natural gas, electricity, and talk companies. The annual revenues of the company rose from $9 billion to more than $100 billion in plainly 5 years after 1995 (Salter, 2008). According to reports and promulgated financials, in 2000 the companys stock cost stood at $90 however, at the end of 2001, the stock price of Enron felt to less than $1. Furthermore, the last published financial statements of Enron depicted that the company made a loss of $586 million (Sterling, 2002). This caused the company to financially fail and by the end of December 2001, the company went bankrupt. As a result of this, billions of dollars were wiped out from the US pileus markets and investors across the globe lost their trust in the US financial and corporate sectors, which were not cost-effective enough to build strong checks and balances on businesses like Enron. The case of Enron opened up investigations into several different unethical practices of otherwise organizations, and the ripple effect shook up the entire US corporate sector. tote up and demand During 1990s, the population of California raised by thirteen percent, whereas, the government did not make any enough investments in building power plants to cope with the rising extremitys of electricity. The government expanded the existing energy plants capacity by 30% during 1990-2001. Furthermore, in 1991 the drought in the northwest states caused the supply of hydroelectric from peaceful Northwest of Oregon and Washington to decline (Barreveld, 2002). Both drought and energy shortages created a supply curtain raising in the country, and the government faced several issues to cope with the energy demand in the region (Swartz & Watkins, 2004). With the rapid increase in the population and the breakdown in Californias electricity generating capacity created a situation of less supply as compared to the energy demand. The industrial sector was highly affected as the supply of energy remained very low during the peak working hours. Furthermore, the private industries were using privately own power generating plants as energy reserves of California were not sufficient to meet the dem and. On the other hand, the state owned energy plants were deliberately shut down in order to manipulate energy prices (Swartz & Watkins, 2004). The gap between supply and demand of energy was deliberate in order to raise prices of the electricity generated by private generators (Miller & Fusaro, 2002). Enron secretly exercised with the government to create a gap between the energy produced and its requirement in the