Corporate Governance and Ethics - Enron Corporation

Enron Corporation
Corporate Governance and Ethics
1-12-2020

Executive Summary
The purpose of this report is to analyse the unethical activities and behaviour adopted by the
top executives at Enron Corporation which resulted in its bankruptcy by the application of
different theories and models. The theories that have been used to present the situation in the
company are Ethical Egoism, Deontology, AAA Model, and Ferrell, Fraedrich, and Ferrell's
model of the ethical decision-making process.
The main reason of conducting this analysis is to identify what theories are followed and
unfollowed by the company and what available options can be used by the accountants in the
decision-making process of the Enron case. The AAA Model has been used in this report in
which two options are provided. From the detailed analysis of both the options that is to hide
the debts of the company or to disclose the real position of the business in the market. The
final decision has been made is to disclose the real position of the company in the market.

Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................2
Part A.........................................................................................................................................2
Overview of the Enron Scandal..............................................................................................2
Theories of Egoism.................................................................................................................3
Theory of Deontology............................................................................................................3
Part B..........................................................................................................................................4
The American Accounting Association Model application on Enron Case...........................4
The scenario for the Model.................................................................................................4
Step 1: Facts of the Enron Scandal Case............................................................................5
Step 2: Ethical Issues of the Case.......................................................................................5
Step 3: Norms, Values, Principles related to Enron Case...................................................5
Step 4: Alternative Course of Action for the Case.............................................................6
Step 5: The Best course of action consistent with the values, norms, and principles of the
Case.....................................................................................................................................6
Step 6: Consequences of each course of action..................................................................6
Step 7: The Final Decision..................................................................................................7
Part C..........................................................................................................................................7
Ferrell, Fraedrich, and Ferrell application in Eron case.........................................................7
Moral intensity....................................................................................................................7

Individual factors................................................................................................................8
Culture of organization.......................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11