Enrons Management is Guilty in the Collapse Writing

There are a lot of versions of why Enron's Corporation failed. In this paper I will present the overview of the basic one. In my opinion, it can be considered the most reliable. So, some researches blame Enron senior executive officials, particularly those who were supervising internal audit staff. They had a personal interest in carrying out risky and venturous transactions. Eventually, they sold their stock simultaneously urging employees to hold theirs, amalgamated conflict of interest and turned a blind eye to insider trading matters. The members of the board of directors failed to ensure vigorous control over the accounting, auditing and reporting process. In fact, a code of ethics was drafted, but the audit committee made every effort to suspend its approval in order to carry out certain transactions.

Enron case reveals that this company has proved to be a real showcase of incentive problems. The primary root of these problems is not a lack of controls, but deliberate measures undertaken in order to circumvent the controls. Furthermore, some Enron officials who, were in charge of monitoring, tried to bring the problem of conflict of interest to the attention of senior management. Unfortunately, these attempts were in vain.

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