Enron's Case Study and Ethics

RUNNING HEAD: ENRON’S CASE STUDY AND ETHICS 1
PROFESSIONAL ETHICS AND LEADERSHIP
COURSE
UNIVERSITY
DATE

2
ABSTRACT
According to Ailon (2015), Enron was created in 1985 after a merge between Houston
Natural Gas company and Omaha-based InterNorth Inc. After the amalgamation, the C.E. O of
the former Houston Natural Gas Company, Kenneth Lay became the overall C.E. O and the
chairman of the company. Later, Enron became the 7th largest U.S company and the largest U.S
trader in Natural gas and electricity by early 2001. Agrawal & Cooper (2017), state that on 16th
October 2001, the company announced a huge loss of $618 million which raised a lot of
concerns hence on 22nd October the same year, the securities and exchange commission started to
audit the company’s financial practices and the company was charged with fraudulence in
securities according to the financial results report that was publicly reported and the company
was declared bankrupt in 2nd December 2001. It surprised many that the natural gas pipeline
company that had experienced great success in business experienced a great downfall and the
collapse left thousands of employees jobless. Most of the investors in the company and the
retirees who were on their pension were left with valueless stock. Cherno& Sornette (2016), state
that During its peak, it had total shares worth $90.75 and after been declared bankrupt, the
company was trading at $0.26. This signifies the worst ever experienced bankruptcy for the
America’s most innovative natural gas pipeline company.