American financial Landscape

The source of Enron's corporate culture, based on Chaffin and Fidler (2002), was Kenneth Lay, whose superficial emphasis on "Respect, Integrity, Communication and Excellence" masked a determination to take in whatever steps (legal or otherwise, actual or false) needed to mask a faulty bottom line.

Additionally, Enron failed to use and publish reputable marketplace risk assessment tools and implement serious risk controls (Hastings, 2002). Management was interested in what Hastings (2002, p. 71) calls "miniscule differences in situations and how they ought to be priced." After this philosophy took more than the corporate culture, executives had no way to respond effectively to large, sudden changes in commodity prices, demand and stock prices. In essence, Enron executives and their lawyers and accountants lied towards the public and also the firm's investors about how well the firm was doing, utilizing extremely questionable and in some cases outright illegal accounting and book-keeping methods to paint a portrait of a firm that was producing incredibly well when, in fact, the reverse was actual (Chaffin & Mich'ls, 2003).

The final question is centered on what policies must be in location to prevent future debacles of this type. Pillar (2003) reported that Congress has acted in the form with the Sarbanes-Oxley Bill, passed in mid-2002, which mandated a new level of accountability that was absent in 2001 as soon as Enron's financial house of cards began to collapse. Under the terms of this Act, executives in a publicly held business must "sign off" on any and all financial or accounting statements; if the statements are found to become false, you can find new and strict penalties (including civil along with criminal sanctions) that may be levied against the singers. Further, corporate lawyers under this Act are now held to a higher ethical standard, standards which require them to report corporate wrongdoing for the firm's Board of Directors and also the SEC.

These difficulties speak directly for the necessity of ensuring that American companies do not mislead investors and that their accounting practices are legitimate. Enron, maybe the most awful of the several corporate scandals with the early 2000s, serves like a grim warning that a failure to report correctly can cause major economic problems that resonate throughout all levels in the national economy.

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