Essay on Enron and Enron’s Demise

How did the corporate culture of Enron contribute to its bankruptcy?
Enron’s corporate culture contributed to its bankruptcy for several reasons.
1. The company supported unethical and illegal behavior so long as it lead to financial gain.
2. They used a “reward system” that gave employees that brought in money huge bonuses and punished employees that weren’t as cutthroat.
3. The company used a “rank and yank” evaluation system that fired the lowest ranking employees.
4. Their primary goal was not to generate profits for the shareholders, it was to enrich executive officer wealth.
Did Enron’s Bankers, auditors and attorneys contribute to Enron’s demise? If so, how? Yes, all parties above did indeed contribute to Enron’s demise. Merrill Lynch, the bankers, facilitated Enron to sell Nigerian Barges therefore making Enron record about $12 million in earnings and thereby meet its earnings goals at the end of 1999. This was a sham. It facilitated Enron in fraudulently manipulating its income statements by entering into a deal whereby Enron would buy Merrill Lynch in 6 months’ time with a guaranteed 15% rate of return. Merrill Lynch replaced a research analyst after his coverage of Enron which displeased Enron’s executives. This coverage would have saved Enron from demise if Merrill Lynch would have prevailed upon Enron to implement it. Merrill Lynch gave in to threats by Enron that it would be excluded from a coming $750 million stock offering and instead, the replacement analyst is reported to have upgraded his report on Enron’s stock rating. The Auditors, Arthur Andersen LLP, were responsible for ensuring accuracy of Enron’s financial statements and internal bookkeeping. Potential investors used Andersen’s reports to judge Enron’s financial soundness and future potential before they decided whether to invest. Current investors used those reports to decide if their funds should remain invested there. As such, the investors expected that Andersen’s certifications of accuracy and application of proper accounting procedures would be independent and

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