Determined to increase profits and boost stock prices, Enron’s CEO, Kenneth Lay and President, Jeffrey Skilling abandoned business ethics in order to maximize their company’s success.
When oil and gas were deregulated in 1996, Enron expanded its business from gas distribution to also include energy trading. During this time, a significant amount of money was needed to support the company’s diversification plans, and Enron increased its borrowings to pursue growth. In order to attract investors, Lay and Skilling manipulated Enron’s financial reporting to conceal debt and show the company in the best possible light. As part of the executives’ plan to deceive investors, a limited partnership named Chewco Investments was created to keep costs off Enron’s books. The strategy worked and initially led to increased stock prices in the latter half of the 1990s. In 2001, a Fortune magazine columnist caught the attention of the financial community when she publicly questioned whether or not Enron was overpriced. With attention drawn to Enron’s questionable financial practices, Lay issued an email to reassure all employees that the company’s stock will continue to climb. Despite Lay’s act of confidence to his employees, however, both he and Skilling sold off their stocks throughout 2001. In late 2001 Enron admitted to owing over $6 million dollars in debt and filed for bankruptcy protection. It took Enron several years to compensate ex-employees for their losses.
Enron is an excellent example of how unethical business practices deface a company and lead to the inevitable downfall of that company.
http://www.crimeradius.com/Enron_A_Disaster_Years_in_the_Making