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Could it really have happened and how?
Could one of the top company’s in the US, one worth billions, and heralded as the most innovative, actually be a fraud? Could people (everyone from executives, auditors, accounting firms, and more) just make up the numbers, imagine the profits and make it a reality? Aren’t there rules? What about regulators, like state and federal authorities? Shouldn’t someone have stopped it?
Much of Chapter 5 talks about white collar crime like fraud. And perhaps there is no more wide-scale a fraud than Enron. You can read entire books or watch movies about the company.
But here is just a brief overview of what happened: https://www.youtube.com/watch?v=e5qC1YGRMKI
Watch the video above and then pick ANY TWO below to answer (1.5 per; 3 pts total). Be sure your posts do not mirror others. Try new options (i.e., this board will be lousy if we all do the same one). Let’s make an option off limits once it has been used twice. Move on to another topic once a prompt has been used twice.
1. What was mark to market accounting and how do you think it contributed to the fraud at Enron? Give specific examples.
2. Who could or should have prevented Enron? Discuss the role of company executives/board of directorts; government regulators; independent accounting firms and auditors; the financial press and analysts for Wall Street.
3. Of the parties listed in #2 above, can you see how any may have had conflicts of interest? Explain.
4. What was the relationship of Enron to government in you view and did this help/hurt society, the economy and the company in the end?
5. Who was Jeff Skilling and what imprints did he leave on the corporate culture of Enron and how did this impact the scandal?
6. List one crime listed in Chapter 5 that you might charge Enron executives with and state why.
7. What was the role of Arthur Anderson? What happened to the firm as a result of Enron?
8. Why do you think some Enron executives were charges with crimes (and not just civil violations)? Explain using terms from Chapter 5.
9. Do you think Enron could happen again? Why or why not? Be specific.
10. What lesson does Enron hold for a company that cannot explain clearly how it makes money (or will make money for start-up or early stage firm)?
11. Describe at least 2 of the cast of characters mentioned from Enron (their bio/role, what happened to them, etc).
12. Did Enron help or hurt society overall in your view?
13. Can you think of 2 or more conflicts of interest from the video?
14. List 3 factors you think could help prevent another Enron?
15. There has been a great deal of recent activity on Wall Street with investors buying into new companies (or older existing ones) and special purpose acquisitions (SPACS) that may or may not make money. What lesson does Enron offer the investors of today, if any?
16. Also, there have been some corporate scandals in the news related to “crytpo” or crypto currency (FTX and Sam Bankman-Fried, etc). Do you see any parallels? Are widespread scandals in business inevitable or can regulations prevent them? Why or how?
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