...Enron Case Study Seven years after the fact, the story of the meteoric rise and subsequent fall of the Enron Corporation continues to capture the imagination of the general public. What really happened with Enron? Outside of those associated with the corporate world, either through business or education, relatively few people seem to have a complete sense of the myriad people, places, and events making up the sixteen years of Enron’s existence as an American energy company. Some argue Enron’s record-breaking bankruptcy and eventual demise was the result of a lack of ethical corporate behavior attributed, more generally, to capitalism’s inability to check the unmitigated growth of corporate greed. Others believe Enron’s collapse can be traced back to questionable accounting practices such as mark-to-market accounting and the utilization of Special Purpose Entities (SPE’s) to hide financial debt. In other instances, people point toward Enron’s mismanagement of risk and overextension of capital resources, coupled with the stark philosophical differences in management that existed between company leaders, as the primary reasons why the company went bankrupt. Yet, despite these various analyses of why things went wrong, the story of Enron’s rise and fall continues to mystify the general public as well as generate continued interest in what actually happened. The broad purpose of this paper is to investigate the Enron scandal from a variety perspectives...
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...Mark-to-Market: The Fall of Enron John Smith State University Mark-to-Market: The Fall of Enron Enron was the face of business in the 1990’s. Rising to meteoric heights never seen before in the business world, to having just as epic of a fall. The core reason behind this meteoric rise and epic fall? Mark-to-Market (M2M) accounting principles. This paper will be presented in four sections. The first section defines and explains the term of M2M. The second section discusses the way M2M was used in the business environment before and after the Enron collapse. The third section focuses on the views of the current business environment on using M2M, both for and against its use. In the fourth and final section, the author gives their opinion on the practice of M2M, and if it is still a viable accounting principle. Mark-to-Market Defined In the private sector all accounting principles and standards are gathered together and organized by the Financial Accounting Standards Board (FASB). They are then put into what is called the FASB Codification. The FASB Codification (2015) defines M2M as a valuation method that uses current market prices and other useful information that is supplied by market exchanges between similar items such as assets, liabilities or a similar business (“FASB Codification,” 2015). Basically what this accounting principle does is use the fair value of the current market price to determine what an asset or liability is worth. Using traditional...
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...Enron and Apple – A Financial Tale of Failure and Success Enron and Apple – A Financial Tale of Failure and Success 2 Abstract This paper analyzes accounting concepts that contributed to Enron’s demise and inclusion on the list of Fortune’s top ten largest bankruptcy filings in US, and in contrast, looks at Apple’s inclusion on the list of Fortune’s top ten most admired companies and reason for its success. Enron and Apple – A Financial Tale of Failure and Success 3 The Fall of Enron Introduction As a Fortune 500 company, Enron Corporation made the “Fortune’s Top Ten” lists seven times: six times as “America’s Most Innovative Company” and one, and last time, as the “Top Ten largest bankruptcy in the US” (Fortune Magazine, 2001, 2009). Within 10 months, Enron’s stock declined from $83 to 26 cents. When the nation's largest energy, electricity and natural gas company filed for bankruptcy in December 2001, shareholders lost tens of billions of dollars, over four thousand employees lost their jobs, and thousands more lost their retirement savings (Ferrell, Fraedrich & Ferrell, 2011, pg 419). Enron’s History and Business Model Enron was formed in 1985 though the merger of two natural gas companies and initially earned its revenue by producing and distributing natural gas. Under the leadership of Ken Lay and later Jeffrey Skilling, the gas company evolved adding electricity, communications, and energy trading to its offerings and continued its development, construction...
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...Enron Case Study Seven years after the fact, the story of the meteoric rise and subsequent fall of the Enron Corporation continues to capture the imagination of the general public. What really happened with Enron? Outside of those associated with the corporate world, either through business or education, relatively few people seem to have a complete sense of the myriad people, places, and events making up the sixteen years of Enron’s existence as an American energy company. Some argue Enron’s record-breaking bankruptcy and eventual demise was the result of a lack of ethical corporate behavior attributed, more generally, to capitalism’s inability to check the unmitigated growth of corporate greed. Others believe Enron’s collapse can be traced back to questionable accounting practices such as mark-to-market accounting and the utilization of Special Purpose Entities (SPE’s) to hide financial debt. In other instances, people point toward Enron’s mismanagement of risk and overextension of capital resources, coupled with the stark philosophical differences in management that existed between company leaders, as the primary reasons why the company went bankrupt. Yet, despite these various analyses of why things went wrong, the story of Enron’s rise and fall continues to mystify the general public as well as generate continued interest in what actually happened. The broad purpose of this paper is to investigate the Enron scandal from variety perspectives. The paper begins with a narrative...
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...An Enron Jury Free of Grudges? Easy, Judge Says! HOUSTON, Jan. 29, 2006 Chances are that in this city's pool of 2.3 million registered voters, there are at least 16 people who are not angry about the implosion of Enron, the largest business collapse in history. But finding them in a single day could be a challenge.! That has not deterred Judge Simeon T. Lake III of Federal District Court, who will begin the much-anticipated criminal trial of the former Enron chief executives Kenneth L. Lay and Jeffrey K. Skilling on Monday.! Judge Lake said in court on Thursday that he expected to choose a panel of 12 jurors and 4 alternates from 100 prospective members in one day. After examining responses to the jury questionnaires, Judge Lake indicated that he felt they did not show evidence of prejudice against the defendants. "I've been impressed by the apparent lack of bias or influence from media exposure," he said.! The lawyers defending Mr. Lay and Mr. Skilling have contended for months that finding impartial jurors in Houston would be difficult, if not impossible. But the judge has rejected two requests to move the trial outside of Houston, where Enron was based, and has repeatedly denied pleas by the defense lawyers to allow them to question individual jurors during the final selection process, called voir dire.! The defense lawyers say they are deeply troubled by responses to jury questionnaires, which came back with mostly negative comments about Enron and the defendants. Many Houstonians...
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...------------------------------------------------- Top of Form The Rise and Fall of Enron | The rise and fall of Enron is an important, complex story. In its early days Enron did the right things for the right reason and garnered substantial credibility. Later successful operations were replaced with the illusion of successful operations. In the last phases Enron milked its credibility to sustain operations through loans. When its credibility with lenders crumbled the loan funds dried up and the corporation imploded. It is reminiscent of the old cartoon of the wily coyote who runs off a cliff. For a period of time after the coyote leaves solid ground he is suspended and tries by furious windmilling to stay suspended but eventually plummets to the ground. In Enron's case the magical period of suspension after it had left the solid ground of economically profitable operation lasted for years. The History of the Natural Gas Industry Natural gas, primarily methane, was originally an unwanted byproduct of petroleum extraction. For many years when an oil well vented gas it was simply flared; i.e., burned off. But people eventually learned the uses and virtues of natural gas and built pipelines to convey it to the cities where it took the place of coal gas for residential and industrial lighting and heating. The market for natural gas has three major types of economic units: 1. Suppliers, 2. Customers, 3. Pipeline companies. In a competitive market the fluctuations in the supply of...
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...1. types of frauds in capital market ( basic classification) http://www.google.co.in/url?sa=t&rct=j&q=indian%20capital%20market%20faruds&source=web&cd=1&cad=rja&ved=0CDgQFjAA&url=http%3A%2F%2Fwww.indiaforensic.com%2Fcorporatemaster.htm&ei=3CTnUInpD8XXkAXy8YGIAg&usg=AFQjCNGa4sSOYe-mM9SHLOBcZLMhgR_uOA&bvm=bv.1355325884,d.dGI 2. What Harshad Mehta did? – The Stock Scam 3. In the early 1990s, the banks in India had to maintain a particular amount of their deposits in government bonds. This ratio was called SLR ( Statutory Liquidity Ratio). Each bank had to submit a detailed sheet of its balance at the end of the day and also show that there was a sufficient amount invested in government bonds. Now, the government decided that the banks need not show their details on each day, they need to do it only on Fridays. Also, there was an extra clause that said that the average %age of bond holdings over the week needs to be above the SLR but the daily %age need not be so. That meant that banks would sell bonds in the earlier part of the week and then buy bonds back at the end of the week. The capital freed in the starting of the week could then be invested. Now, at the end of the week many banks would be desperate to buy bonds back. This is where the broker comes in. The broker knew which bank had more bonds (called ‘plus’) and which has less than the required amount (called ‘short’). He then acts as the middleman between the two banks. Harshad...
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...caused the demise of HealthSouth?...……………………………………. 5 Characteristics of Unethical CEOs……………………………………………………… 6 Was Richard Scrushy narcissistic?.……………………………………………………. 7 Impact on Stakeholders………………………………………………………………… 8 Outcome and Fairness of Punishment…………………………………………………. 9 Conclusion……………………………………………………………………………... 10 References……………………………………………………………………………… 12 HEALTHSOUTH: THE SCRUSHY WAY 3 Introduction For at least 20 years, HealthSouth represented a new concept in health care. Its founder, Richard Scrushy was the embodiment of the American dream. His rise was meteoric, yet ultimately the empire he created collapsed due to fraud of his creation. Richard Scrushy Represented the American Dream Richard Scrushy came from humble beginnings. He was born in Selma, Alabama, dropped out of high school, married, and fathered two children. He worked in manual labor jobs, even managing a gas station, until he enrolled in the University of Alabama and completed a degree in respiratory technology (Solomon, Carrns & Terhune, 2003, March 20). After he worked as a respiratory technician for several years he began a company of...
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...NOTE: Facilitator noted that more indepth info would have been beneficial to this paper, so please only use this as a reference. Table of Contents 1. Assignment cover sheet p. 0 2. Title page: HealthSouth and the Scrushy Way p. 1 3. Table of Contents p. 2 4. Introduction p. 3 5. Government Subsidies p. 3 6. Signs of Corruption p. 4 7. Ethical issues of HealthSouth p. 5 8. Management of HealthSouth p. 5 9. Intimidation and Cooperation p. 6 10. Culture of Corruption p. 7 11. Lavish Lifestyle and Philanthropy p. 8 12. Impact on Stakeholders p. 9 13. Charges p. 10 14. Outcome and Fairness of Punishment p. 10 15. Conclusion p. 12 16. References p. 13 HealthSouth and the Scrushy Way Richard Scrushy overcame challenging teenage years, dropping out of high school and later obtaining his GED to become one of the most successful executives in the United States. Scrushy did so by subsequently getting his respiratory therapist certification and opening his own rehabilitation center, an all-in-one medical facility that led many to copy his idea. Scrushy founded HealthSouth in 1996 using $1 million in seed capital and turned it into a hugely successful medical services empire worth over $4 billion at its prime (Haddad, Weintraub, & Grow, 2003). HealthSouth had become...
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...bepress Legal Series Year Paper Enron and the Special Purpose Entity. Use or Abuse? The Real Problem - The Real Focus Neal F. Newman Texas Wesleyan Law School This working paper is hosted by The Berkeley Electronic Press (bepress) and may not be commercially reproduced without the permission of the copyright holder. http://law.bepress.com/expresso/eps/1165 Copyright c 2006 by the author. Enron and the Special Purpose Entity. Use or Abuse? The Real Problem - The Real Focus Abstract In December of 2001, Enron Corporation filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code; one of the largest corporate bankruptcy filings at that time. When the investigations commenced and the tangled Enron web was unraveled, it was discovered that Enron had perpetrated a very sophisticated form of accounting fraud through its repeated use of what are referred to as Special Purpose Entities (“SPEs”). In their most basic forms, SPEs are business entities formed for the purpose of conducting a well specified activity such as construction of a gas pipeline, or collection of a specific group of accounts receivable. However, because of their complex nature, SPEs can be used to manipulate a corporation’s financial results, which was the primary use for which Enron employed the SPE structure. As a result, the investment and financial community has cast a dark cloud over the special purpose entity, depicting the SPE as an inherently evil structure whose only purpose is to...
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...Stock Investing FOR DUMmIES 2ND by Paul Mladjenovic ‰ EDITION Stock Investing FOR DUMmIES 2ND ‰ EDITION Stock Investing FOR DUMmIES 2ND by Paul Mladjenovic ‰ EDITION Stock Investing For Dummies® 2nd Edition , Published by Wiley Publishing, Inc. 111 River St. Hoboken, NJ 07030-5774 www.wiley.com Copyright © 2006 by Wiley Publishing, Inc., Indianapolis, Indiana Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600. Requests to the Publisher for permission should be addressed to the Legal Department, Wiley Publishing, Inc., 10475 Crosspoint Blvd., Indianapolis, IN 46256, 317-572-3447, fax 317-572-4355, or online at http://www.wiley.com/go/permissions. Trademarks: Wiley, the Wiley Publishing logo, For Dummies, the Dummies Man logo, A Reference for the Rest of Us!, The Dummies Way, Dummies Daily, The Fun and Easy Way, Dummies.com and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc. and/or its affiliates in the...
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...Efficacy of Corporate Governance Contents 1. Definition of Corporate Governance 2. History of Corporate Governance – Pre and Post Liberalization 3. Objectives of Corporate Governance 4. Need of Corporate Governance 5. Framework of Corporate Governance 6. Principles of Corporate Governance in India and in the World 7. Merits and Demerits of Corporate Governance 8. Impact of Violation of Corporate Governance Laws 9. Case Study – a) Satyam b) Pfizer c) 3rd Company 10. Conclusion 11. Bibliography Definition "Corporate Governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The corporate governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society"-(Sir Adrian Cadbury in 'Global Corporate Governance Forum', World Bank, 2000) Corporate governance is the relationship between corporate managers, directors and the providers of equity, people and institutions who save and invest their capital to earn a return. It ensures that the board of directors is accountable for the pursuit of corporate objectives and that the corporation itself conforms to the law and regulations. - International Chamber of Commerce Corporate Governance deals with laws, procedures, practices and implicit rules that...
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...THE INTELLIGENT INVESTOR A BOOK OF PRACTICAL COUNSEL REVISED EDITION B E NJAM I N G RAHAM Updated with New Commentary by Jason Zweig To E.M.G. Through chances various, through all vicissitudes, we make our way. . . . Aeneid Contents Epigraph iii Preface to the Fourth Edition, by Warren E. Buffett viii A Note About Benjamin Graham, by Jason Zweig x Introduction: What This Book Expects to Accomplish COMMENTARY ON THE INTRODUCTION 1. 1 12 35 The Investor and Inflation 47 COMMENTARY ON CHAPTER 2 3. 18 COMMENTARY ON CHAPTER 1 2. Investment versus Speculation: Results to Be Expected by the Intelligent Investor 58 65 COMMENTARY ON CHAPTER 3 4. A Century of Stock-Market History: The Level of Stock Prices in Early 1972 80 General Portfolio Policy: The Defensive Investor 88 COMMENTARY ON CHAPTER 4 5. 101 124 Portfolio Policy for the Enterprising Investor: Negative Approach 133 COMMENTARY ON CHAPTER 6 7. 112 COMMENTARY ON CHAPTER 5 6. The Defensive Investor and Common Stocks 145 iv 155 COMMENTARY ON CHAPTER 7 8. Portfolio Policy for the Enterprising Investor: The Positive Side 179 The Investor and Market Fluctuations 188 v Contents COMMENTARY ON CHAPTER 8 9. Investing in Investment Funds COMMENTARY ON CHAPTER 9 213 226 242 10. The Investor and His Advisers 257 COMMENTARY ON CHAPTER 10 272 11. Security...
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...Best Practices in Records Management & Regulatory Compliance Andy Moore . . . . . . . . . . . . . . . . . . . . . . . . . .2 Cheryl McKinnon, Hummingbird Ltd. . . . . . . . . . . .4 Records Management: Beyond the Quick Fix There’s a movie playing at my multiplex that warns against placing blind trust in technology, because it’ll getcha in the end. I haven’t seen it yet …” The RM Challenge of Electronic Communications The world of a typical knowledge worker is changing once again. Over the last two decades the technology revolution has broadened access to authoring tools, e-mail and other forms of electronic communication … TOWER Software North America . . . . . . . . . . . . . .6 Randolph Kahn, Esq. & . . . . . . . . . . . . . . . . . . . . . . . . . .8 Barclay T. Blair, Kahn Consulting E-Mail Management: Avoiding the 6 Common Mistakes Information management has become a vital focus for all organizations to address risk mitigation, compliance and overall business continuity … Records Management Redefined: From The Backroom to the Boardroom What is Records Management? Records management is the application of policies, practices, technologies and other management controls … Del Zane and Dean Berg, Stellent . . . . . . . . . . . . .10 Turning Compliance Projects into Business Processes In the not-too-distant past, compliance initiatives often were characterized by back-office operations that involved large volumes of records … Michael McLaughlin, Exact Software . . . . . ....
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...THE END of POVERTY Economic Possibilities for Our Time JEFFREY D. SACHS THE PENGUIN PRESS N E W YORK 2005 THE PENGUIN PRESS Published by the Penguin Group Penguin Group (USA) Inc.. 375 Hudson Street. New York, New York 10014, U.S.A. Penguin Group (Canada), 10 Alcorn Avenue, Toronto, Ontario, Canada M4V 3B2 (a division of Pearson Penguin Canada Inc.) Penguin Books Ltd, 80 Strand, London WC2R ORL, England Penguin Ireland, 25 St. Stephen's Green, Dublin 2, Ireland (a division of Penguin Books Ltd) Penguin Books Australia Ltd, 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd) - Penguin Books India Pvt Ltd, 11 Community Centre, Panchsheel Park, New Delhi-110 017, India ' Penguin Group (NZ), Cnr Airborne and Rosedale Roads, Albany, Auckland 1310, NewZealand (a division of Pearson New Zealand Ltd) - Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa Penguin Books Ltd, Registered Offices: 80 Strand, London WC2R ORL, England First published in 2005 by The Penguin Press, a member of Penguin Group (USA) Inc. Copyright ©Jeffrey D. Sachs, 2005 All rights reserved Page 397 constitutes an extension of this copyright page, LIBRARY OF CONGRESS CATALOGING IN PUBLICATION DATA Sachs, Jeffrey. The e n d of poverty / Jeffrey Sachs. p. cm. Includes bibliographical references and index. ISBN 1-59420-045-9 1. Poverty—Developing countries. 2. Developing countries—Economic policy...
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