Enron Company’s Unethical Business Research Practices

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The issue of ethics has been taken for granted for so many years. In the real sense of it, it is indeed paramount and significant for many reasons in the world’s organizations.

This means that institutions have to make sure that they conform to the greatest degree of ethics in all their undertakings (Cooper & Schindler, 2011).

Ethics is also of utmost importance when the issue of business research comes up. This paper will allude to a case where unethical business research practices were done by an institution known as Enron.

The main elements of the Enron case will be to highlight the many important issues relative to the case. More importantly, in this Enron case, several ethical concerns have to be put into perspective.

The issue of business research practices came under scrutiny when Enron, considered among the top ten biggest firms of the United States collapsed owing to a number of unethical accounting tactics (Shantal, 2011).

The events that followed this unprecedented incidence saw many other large institutions in the US go down one after the other or seek some sort of bankruptcy cover. In fact, the more popular Mary Stewart was similarly censured for insider trading.

These series of fraudulent actions done by large institutions sparked a spate of heightened public mistrust concerning business practices and values. The Securities and Exchange Commission is investigating some companies like Enron and WorldCom.

Adelphia, Global Crossing, Kmart, Qwest Communications and Xerox have not escaped this too. All this institutions mentioned were once organizations that were honorable and respected.

However they were charged with the devious and unethical practice of projecting increased profit levels to cheat stakeholders and gain more profit as well as creating higher revenue from costly stocks.

WorldCom was insolvent by July 2002. This occurred as one of the worst bankruptcies ever witnessed in history. Enron and WorldCom greatly overstated their profit projections therefore committing a serious offence of manipulating the stakeholder’s views.

For example, WorldCom dishonestly raised their profit values by at least seven billion dollars. This act caused many analysts, brokers, and accountants to scramble for the stocks.

Enron was also a shame to the industry when its unethical accounting activities led to a serious financial crunch. The accounts for Enron show that the revenue in 2000 was set too high.

The company was developing quickly and was even selected by Fortune Magazine as among those institutions whose stocks would be able to last the whole starting decade of the 21^st century (Shantal, 2011).

The event that saw Enron go bankrupt moved the world by surprise. Enron was not only the largest failure in the US in a few years gone but also the quickest.

Just before seeking a bankruptcy cover late last year, Enron had been the seventh biggest company established in the United States of America.

It had been extremely successful in converting all its major business operations into monopolies through the domination of major business fields.

However, an institution that had appeared so strong just a year ago went down unexpectedly when an accountant started raising concerns concerning the strange transactions that were concealing the correct debt position that Enron had truly found itself in according to the available accounting books.

Nevertheless, the true situation that Enron was in suddenly began to unfold gradually to the entire public and it became apparent that the profit projections that Enron had been showing in the past were just but a total illusion.

Enron and WorldCom succeeded in making the mistakes with an accountancy firm known as Arthur Anderson that was being mentioned among the top five firms that manipulated the accounting books of Enron.

Instead of engaging in such unethical practices that would otherwise come to light one day, Enron should have engaged in acceptable accounting practices which would definitely be significant for Enron’s business activities.

The issue of unethical crisis is obviously a controversial topic today. With no retribution in sight and no expected resolution for the long term, the public is more informed of the American Business World.

It now seems that as days pass, big organizations get in the news for dishonest activities. The most surprising bit however is that such unethical activities have involved big accounting institutions: institutions that are formed with the major objective of offering true third party assistance.

Some of the big accounting firms that have in the past been blamed for unethical practices include Arthur Andersen, KPMG, and Price Water House Coopers among many others.

References

Cooper, D., & Schindler, P. (2011). Business research methods (11th ed.). New York, NY: McGraw-Hill/Irwin.

Shantal, P. (2011). Business Practices. A Help for Students, 149. Web.

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Enron Company’s Unethical Business Research Practices

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