Business Ethics
Robbi Logan
FIN/486
November 24, 2014
Rosa Welton
Business Ethics
Major factors that led to the dissolution of Enron and WorldCom
Enron-
Enron was found to have disguised its huge losses and inflated it profits and revenues by “routing transactions through offshore limited partnerships which Enron controlled [1]. Many of those losses and debts were not even reported on the organization’s financial statements. It was also discovered that Enron was conducting “institutionalized, systematic, and creatively planned account fraud” [1]. Many of Enron’s executives, who knew about the company’s financial situation, profited from the sale of Enron’s company stocks at the inflated prices several months before the company announced that it was filing for bankruptcy. Because of the organization’s failure to report accurate financial statements, “Moody’s and Standard and Poor’s continued to rate Enron’s stock as investment grade until four days before the organization declared bankruptcy” [1].
WorldCom was found to have been “cooking the books”. In other words the organization was committing fraud by reporting that they had more funds than they actually had, trying to make the firm look better to investors. There was also insider loaning and lending going on [2].
The Role of Business Ethics in Strategic Planning
Business ethics is a “written set of guidelines issued by an organization to its workers and management to help them conduct their actions in accordance with its primary values and ethical standards” [3]. Without business ethic, employees would be able to do just about anything they wanted. If an organization hopes to be a success it must first start with instilling good ethical behavior on all of its employees. The consumer depends upon the organization to provide accurate and honest financial reporting. When companies like Enron and WorldCom commit fraud and lie about their financial situation it makes it...