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Enron's Downfall, a Corporate Governance Failure.

Maguire, Susan (2007) Enron's Downfall, a Corporate Governance Failure. Undergraduate thesis, Dublin, National College of Ireland.

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Abstract

In fifteen years Enron grew from nowhere to be America's seventh largest company, employing 21,000 staff in over forty different countries. The companies' success turned out to have involved an elaborate scam. Enron lied about its profits and stood accused of some very shady dealings, including concealing debts so they didn't show up on the companies' accounts. As the depth of the deception unfolded, investors and creditors withdrew forcing the company into a chapter 11 bankruptcy in December 2001.

It was one of the most catastrophic corporate collapses in American history. Enron was a very successful energy company that had serious ambitions to be the world's biggest energy trader. At one point by stock market values it was the seventh biggest company in America, led by it's vibrant and politically connected chairman Kenneth Lay. Share price collapsed when it unfolded that Enron had concealed losses by setting up shell companies. One of the executives was not happy about the strategy the company was taking and wrote a letter of warning to Chairman Kenneth Lay about conflicts of interests, this letter was ignored as Sherron Watkins was only one voice that wasn't taken into consideration, the Chairman had total power anyway. Many executives benefited from the companies high share price by cashing in their stock options, which they knew, wouldn't hold a high value for much longer.

Employees suffered a great deal in relation to the collapse of Enron, most of them had invested their entire pension fund into Enron shares and when the company collapsed and filed for bankruptcy in December 2001 the employees lost everything.

This dissertation aims to show corporate governance malpractices were to blame for the downfall, of this once great giant, and how it has subsequently changed the face of corporate governance worldwide.
"It had taken Enyon sixteen years to go from ten billion in assets to sixty five billion in assets, and it took them twenty four days to go bankrupt" The Smartest Guy in the
Room, McLean and Elkind, 2004.

Item Type: Thesis (Undergraduate)
Subjects: H Social Sciences > HG Finance > Credit. Debt. Loans. > Bankruptcy
H Social Sciences > HD Industries. Land use. Labor > Large Industry. Corporations. > Corporate Governance
Divisions: School of Business > BA (Honours) in Financial Services
Depositing User: SINEAD CORCORAN
Date Deposited: 12 May 2011 14:31
Last Modified: 03 Dec 2014 15:23
URI: http://trap.ncirl.ie/id/eprint/516

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