Fastow, Lay, and Skilling were acting their own best interest with complete disregard for other employees and stockholders. It didn't make a difference to either of them who would lose everything as long as they had plenty of money and didn't get caught. The extent to which these individuals acted ensured not only the downfall of the entire company but everyone that had anything to do with the company.
Enron is definately an example of the agency problem. The managers were clearly not working for the benefit of the stockholders, but for themselves. The stockholders played the role of funding these poor strategies and losing a great deal of money for it.
Subscribe to:
Post Comments (Atom)
2 comments:
I agree with the comment that my fellow group member has made. Fastow, Lay, and Skilling thought of their family’s best interests, and also their own before anything involving the company and its Stockholders, which were mostly made up of employees. They wanted to become something of great importance in a short amount of time. This is a recipe for disaster. Once they reached a point where they thought that they were untouchable, the company started to go under. Employees started to get fired for no reason, including employees in the office who were in charge of important financial documents.
Ever since Enron was considered one of the "Most innovated companies of the year" by the Fortune magazine, they started to plummet. The managers got to greedy to fast. They found a loop hole where they could make a profit behind the companies back. Once this starts to happen in a company were the bad seed isn’t removed, then the company as a whole starts to act un-ethical. Enron was doomed from the first day that it started.
Enron is defiantly an example of an agency problem, as my group member already mentioned. Enron's management was pursuing strategies that were not in the best interest of its stockholders and also their employees. They were unethical and are still paying for their mistakes and management and also as a company.
I agree that Fastow, Lay and Skilling were acting in their own best interests in the Enron situation. The problem started early on in Enron, when by contract lower Enron employees were prevented by contract from selling their stocks, while the upper levels of management were given the option. From the start, Enron's managers protected themselves from loss if the company failed, but sentenced its employees to loss of retirement savings in the event of a collapse. The hiding of company acquisitons and the hidden partnerships are another example of these three men working in their own interests without considering the effects on the rest of the company. This proves my group member's point that they were acting in their own best interests.
Enron's case is definately an example of the agence problem. As stated above, the managers made their moves without ever consulting stockholders, and worked hard to hide their choices from them. People who risked exposure of the managers' secret programs were fired and silenced. Enron's case is a perfect example of unethical behavior in business.
Post a Comment