4 Ethical Issues with Enron Essay
1- Encouraging employees to invest and buy stock in Enron when they knew the truth about the lack of value in the stock.
As an employee you trust in your management to make the best choices both for you and for the business to succeed. Ken Lay and other executives strongly encouraged Enron employees to invest in …show more content…
4- Hid losses by moving around business units.
It was found out that Enron was recording their profits prior to earning them, known as mark to marketing accounting. While this is an accepted practice, these companies must acknowledge and report when losses are made on these businesses. Instead of reporting those losses, Enron would move them to other partnerships held by Fastow, the CFO at Enron. They stashed the debt in these partnerships that were financed through investment companies like Merrill Lynch and Citibank. At the same time if these financial companies did not hide these debts Enron threatened to pull their money out.
This effect was again broad for those investors of both Enron and the associated financial institutions. This accounting was wrong as people were being deceived not only by Enron, but by the financial institutions in which investors spend their money. Investors trust that the institutions will make the best and most ethical