Social Consequences Of The Enron Scandal

Improved Essays
examined the market reactions to SOX and cited (Li et al., 2004) findings of significant positive response around stock returns, (Rezaee and Jai, 2003) results show positive stock price reaction before SOX passed, (Ptacek & Salazar, 1997; Weeks & Nantel, 1992) studies shows customers believe it’s important and companies have a more positive image and public perceptions remains high, while (Oversight Systems Inc., 2004) survey results reveals 37% of increased in shareholder value as investor gain confidence on ethical business, 25% boost shareholder value by gaining market confidence, 33% decreased shareholder value as cost suppress stock price, and 14% decreased their ability to pay out dividends as compliance cost reduced earnings, (AMR Research, 2003) study shows 85% of public companies are switching …show more content…
J. (2013) Common financial statement fraud schemes. Retrieved from https://www.google.com/?gws_rd=ssl#q=common+financial+statement+fraud+schemes+by+jamal+ahmad
Cernusca, L. (2011). Ethics in accounting: The consequences of the Enron scandal. Agricultural Management, 13(3), 35-42. Retrieved from http://eds.b.ebscohost.com/eds/detail/detail?vid=2&sid=59e976ea-caa3-4b98-a718-e29420909cda%40sessionmgr114&hid=120&bdata=JnNpdGU9ZWRzLWxpdmU%3d#AN=67096081&db=bth
Giroux, G. (2008). What went wrong? Accounting fraud and lessons from the recent scandals. Social Research, 75(4), 1205-1238. Retrieved from http://eds.a.ebscohost.com/eds/detail/detail?vid=2&sid=256a1148-cdcf-4767-9e49-9601090ef5b7%40sessionmgr4005&hid=4108&bdata=JnNpdGU9ZWRzLWxpdmU%3d#AN=36934864&db=buh
Ravenscroft, S., & Williams, P. F. (2005). Rules, rogues, and risk assessors: Academic response to Enron and other accounting scandals. European Accounting Review, 14(2), 363-372. Retrieved from

Related Documents

  • Improved Essays

    The Sarbanes-Oxley Act

    • 884 Words
    • 4 Pages

    MAYBE A BALLER INTRODUCTION HERE IDK CHECK LATER On July 30, 2002, the United States government enacted a law that set expanded or even completely new requirements for all United States public company management, boards and public accounting firms. This was the Sarbanes-Oxley Act, also known as the “Public Company Accounting Reform and Investor Protection Act” in the Senate, and the “Corporate and Auditing Accountability and Responsibility Act” in the House of Representatives. (REFERENCE). In addition to setting new requirements for public companies, there are also numerous provisions of the Act that apply to private companies as well. Included in these provisions is the willful destruction of evidence to impede a Federal investigation.…

    • 884 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Final Project Part 1 Tina McGee Due 9/25/2017 I. Analyze Roles and Responsibility for Compliance A. A finance manager is tasked to manage the funds of a company to the best benefit of the company while following compliance guidelines. To do this some of the decisions a finance manager would make would pertain to the capital structure of a company, input on investment and dividends, cash management and very importantly evaluating the financial performance of the company. B. As a financial manger each of the above decisions will need to be made in the most ethical and legal manner possible.…

    • 860 Words
    • 4 Pages
    Improved Essays
  • Superior Essays

    The unethical decision by both parties during this scandal caused great unrest for the public. It wasn’t just the failure of laws and regulations, but also the failures of corporate leaders and attorneys that were supposed to foster an ethical self-policing practice. Enron was the example to many other businesses at the time that exploited large payoffs to accounting firms in return for misrepresented…

    • 1234 Words
    • 5 Pages
    Superior Essays
  • Improved Essays

    First, the Accuhealth’s executives clearly departed from a sound operating philosophy of ensuring appropriate accounting reports and protection from fraud loss as well as meeting external shareholders’ expectations. By embezzling cash and overstating inventory, they failed to set an ethical tone at the top for their employees and were sending a clear message to their employees that committing fraud was acceptable and needed not to be taken seriously, therefore creating an entire culture of workplace frauds. Moreover, the company’s control environment was deeply undermined by the employment of several immediate relatives and family members as the company’s top management and board of directors. The close relationships among top executives greatly diminished the independence of the board of directors from management and their abilities to exercise oversight of the development and performance of internal control, which caused ineffective monitoring of internal controls and fostered collision among officers and employees to commit…

    • 774 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    Cost & Benefits of Sarbanes-Oxley Act There are many debates related to the cost and the benefits of the act. The supporters of this act claimed that it was absolutely essential and played a main role in rebuilding the public’s trust in the U.S. stock markets, and in strengthening the corporate accounting principles. On the other hand, the opponents argued that since SOX, the complex regulation, was enacted, U.S. financial service providers lost their competitive edge against foreign providers (Chan, Farrell, & Lee, 2008). The supporters of this act claimed that the benefits of SOX are greater than the cost and vice versa. Cost of Sarbanes-Oxley Act Sarbanes–Oxley has been criticized as a very expensive regulatory overreaction (Coates, 2007).…

    • 1342 Words
    • 5 Pages
    Great Essays
  • Decent Essays

    “Greed for the lack of better word is good” was one of the famous line from the 1987 movie “Wall Street”. Turns out not, nothing can presumably accentuate human greed more than corporate fraud. What happened with WorldCom Group, one of the world’s largest telecom giant, is a testament to how catastrophic human greed can be. With the failure of a multi-billion dollar telecom corporation, the world witnessed one of the largest accounting frauds in the history. What sets WorldCom’s case apart from Enron’s and other accounting fraud cases is that it didn’t fail just from accounting manipulations responsible for the overstatement of their earnings.…

    • 143 Words
    • 1 Pages
    Decent Essays
  • Decent Essays

    The management of Enron Company raised the company’s price share over a short period through misappropriation of accounts, which misrepresented the company’s profits to investment relations campaigns. Through such malpractices, the management managed to sell 1.75 million shares of worth more than $1 billion at a price ranging from $80-$40 down. There was contradiction, lack of transparency in Enron has published financial statements, and its financial status as it was at that moment. The misappropriation of funds and accounts was a deliberate and intentional strategy of Enron’s Corporation top management, which was a direct show of fraudulent activities and dishonesty undertaken in the company…

    • 104 Words
    • 1 Pages
    Decent Essays
  • Superior Essays

    In the first chapter. the author mentioned some example to talk about fraud and its goal. Such as when there is a reward for donating blood, more people will donate their blood, but…

    • 1234 Words
    • 5 Pages
    Superior Essays
  • Improved Essays

    In the early 2000’s the United States was rocked by several companies, such as: Enron, WorldCom, Tyco and Sunbeam because these companies collaborated with their auditors and provided misleading financial reports to their investors and shareholders. Consequently, the Sarbanes Oxley Act of 2002 was enacted by the U.S. Congress to protect investors from the possibility of fraudulent accounting activities by corporations by mandating strict reforms to improve financial disclosures from corporations and preventing accounting fraud (Staff, 2017). It is vital to compare and contrast the views of management and accounting regarding changes required by the Sarbanes Oxley Act on Internal Controls and how these changes have affected corporations, accounting firms and investors. Primarily, the focus will be on comparing the views of management and accountants regarding changes under SOX.…

    • 590 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    Moral Reform

    • 530 Words
    • 3 Pages

    When activists, citizens, and others made pleas for prosecuting the companies who were manipulating information and committing investor fraud, Congress enacted a corporate reform law (130). This law placed heavy requirements on companies while ignoring those who failed in regulating the previous companies. While the corporate reforms did improve the companies superficially, the only way to actually improve a company is moral reform. There are three principles that summarize corporate reform. Transparency is the first: that the company will “conduct business and make decisions with integrity, honesty, and input from investors.”…

    • 530 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    Sarbanes Oxley Act Essay

    • 818 Words
    • 4 Pages

    The Sarbanes Oxley Act of 2002 which was also called SOX was published by the Congress in 2002 to protect investors’ interest (SOX, 2002). After the enactment of SOX, corporate financial reporting was more strict and normative. However, there were a lot of accounting scandals before 2002. And the Enron scandal attracted the most public attention of all the scandals. Enron was created in 1985 and was one of the largest energy companies around the world.…

    • 818 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Essay Outline White-collar crimes, although not discussed very often, are on rise. When one hears the word crime, they are inclined to think violence or an unethical abuse of some sort. However, people rarely take corporate crimes such as fraud, theft, forgery, or embezzlement into a higher regard, as they do not highly affect the common citizen personally. Studying these executive crimes is important to raise awareness of deceit within society, and to protect and prevent unethical practices from occurring. The latent impact of these white-collar crimes is the emotional trauma, blackmail, and loss of finances.…

    • 1228 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    In 2002, the Sarbanes-Oxley (SOX) Act was passed by congress and signed into law by President George W. Bush. SOX was written as a response to several major accounting scandals that occurred at large companies (including Enron, WorldCom, and Tyco) in the early 2000’s. These scandals forced capital providers and the general public to question the judgement of public accounting firms as well as at the overall reliability of the financial reporting and audit process. The requirements included in SOX were designed to improve audit quality, increase the reliability of financial reporting, bolster corporate governance, and re-establish public and investor confidence in the financial reporting process. Some of the most impactful aspects of the Act…

    • 727 Words
    • 3 Pages
    Improved Essays
  • Superior Essays

    Thus, we often see articles about how companies covered up their soon-to-be scandals, how companies assured citizens but ended up hurting the environment (chemical companies and their wastes), and fraud among executives like the ENRON scandal. The ENRON scandal was a big event in American economy history, because such large energy company was doing illegal practices, from the executives to employees, no one said anything before it was revealed. There must be employees who knew about the executives’ action and were against it, but because of loyalty and they were afraid to be fired, what they could have done was limited, and this is just one example among many. In result, to prevent such big problems from happening, companies must guide their members in an ethically way. As Daryl Koehn, author of the article “Is Business Ethics an Oxymoron?”, wrote: “In more general terms, businesses must care about ethics because businesses are part of a human community.…

    • 1291 Words
    • 5 Pages
    Superior Essays
  • Great Essays

    Healthsouth Scandal Essay

    • 2186 Words
    • 9 Pages

    However, the corporation was caught by selling 75 million dollars in shares a day before the company experienced a huge loss, catching the attention of U.S. Securities and Exchange Commission (SEC) . A company which was known for its ambulatory surgery and rehabilitative health care services throughout the United States fabrics one of the most inconspicuous false impressions known to the corporate world. Carefully using deceptions of the Generally Accepted Accounting Principles (GAAP) such as materiality, conservatism, and reliability, verifiability, and objectivity as well as ethics, the company was able to improve their initial appearance. HealthSouth failing to meet the materiality, conservatism, and reliability, verifiability, and objectivity accounting principles as well as ethic standards meets its fall when the company is caught with conspiracy, security fraud, and money laundering carefully scattered along their financial statements and kept hidden by their dedicated employees. Corrupted management, originated financial statements, and falsified numbers all contributed to the history of HealthSouth’s…

    • 2186 Words
    • 9 Pages
    Great Essays