Enron: The Smartest Guys in the Room
In our Comm101 classes, we have alluded to the Enron scandal several times already. So what is the Enron scandal? And what caused a large company like this to collapse?
Enron’s collapse was not because it had gotten too big, but because it was perceived by other to be much bigger than it actually was. It decentralized its operations into numerous shell corporations, they were able to hide their losses. Enron’s losses were held off, with only their assets being stated. This made Enron the darling of Wall Street. It was able to expand into e-commerce and other ventures. Their stocks rose, which made employee compensations and pension (in the form of stocks) seem very attractive. Enron’s scandal did not happen by accident. It was facilitated by corporate dishonesty which encouraged greed.