Lessons Learned From Enron's Failure
The well-established company Enron, which was once ranked by Fortune as “the most innovative company in America” faced bankruptcy and thus the downfall of Enron. One of the causes of Enron’s failure is that there is a weak corporate governance of board of directors. Their lack of social responsibility from the 4 main criteria identified by Archie Carroll, which is economic, legal, ethical and discretionary responsibilities. They only want to make profits without taxes and move up, leaving all the details behind for worrying later. They are doing business using the classical view, where the management’s only responsibility in running a business is to maximize profit .
Secondly, Enron’s fall was initiated by a flawed and failed corporate strategy which leads to many unwise decisions. But unlike other normal corporate failures, Enron’s fall was ultimately precipitated by the company’s pervasive and sustained use of aggressive accounting tactics to generate misleading......
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