Table of Contents
In the corporate culture where executives are rewarded huge bonuses on declaring huge profits leads to corporate excesses such as greed and financial misreporting in corporate the corporate world. Their repercussions to the society include loss of savings and investments and collapse of corporate institutions. Thousand of the Enron's employees lost their saving and jobs as a result of the collapse of the corporation. While the investors lost billions of dollars by investing in the company's stocks.
The paper is intended to take a critical look at the documentary film "Enron: The Smartest Guy's in the Room" and the underlying lessons to the investing public as well as to the policy makers. The paper will address the lessons that are depicted in the documentary by evaluating:
1. Historical background of the collapsed Enron corporation
- How the corporate was founded and its growth
- The corporate culture of the collapsed corporation.
2. What caused the collapse of Enron
- How bonuses to the executives lead to their financial misreporting.
- How greedy auditors colluded to misrepresent financial statements.
3. How collapse of Enron could have been prevented.
- Did the relevant act negligently abetting in the corporate collapse.
- How loopholes in financial laws can be exploited
- How the investors were blinded by quick gains preventing them being cautious when investing.
- How over speculation can lead to huge loses.
4. Lessons from the collapsed corporation.
- Lesson that were taught to the policy makers and the investing public from the collapse.
- Lessons that the collapse taught other corporations.
5. Conclusions and recommendations.