Enron’s Failures
Leadership Failures
Management Failure
The management failure for Enron had occurred when everyone began pointing the blame to a different person, as a game of hot potatoes. Instead of each person taking the blame for the wrongdoing one had done. For instance, the auditor David Duncan pointed his finger to the management team for covering up loses of the company. Then the management blamed Chief Financial Officer Andrew Fastow for the unspeakable subsidiaries. From there the blame went to Kenneth Lay. (Plotz, 2002) The employees were also involved with the scandal. The employees were compensated for them hiding the corporate dept so that the company could boost profits.
Enron’s Impact on Corporate Structures
The Sarbanes-Oxley Act (SOX) made structures, which govern the conduct of corporations, such as Enron a substance of federal law. The intentions of SOX are to restore stakeholder’s confidence following the outbreak of scandals and bankruptcies such as Enron (OSU, n.d.). By tradition, corporate govern structure have been an undisclosed subject between the management and shareholder with some state law limitation. SOX provide a system for balancing the control between the board members and upper level management of corporations. SOX is recognized as a preventative source, even though it cannot stop management deception (Tipgos & Keefe, 2004). In order for Enron to further prevent or stop management deceptions, everyone who is involved shall follow the vision. Under the law, “top management has to certify the accuracy of the financial reports and make certain disclosures about the controls and procedures in place to avoid fraudulent financial reporting. Even a code of ethics for senior corporate financial officers is now a requirement of the law (Tipgos & Keefe, 2004, p. 2).
Enron’s New Structure
In conclusion, the failure of Enron was the result of unethical activities by the upper level management. The failure...