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HIGHLIGHT THE FACTS WHICH LEAD TO THE FALL OF ENRON ?
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Answer Posted / manastosh kumar singh
Enron collapsed because it was losing money and had been
doing so for a long time. Enron lost money because its
management made some disasterous decisions. Typically these
disasterous decisions were from over-and-unjustified
confidence in their ability to manage. They went into risky
fields where they had no experience and failed, failed
miserably. They developed an expertise in disguising and
covering up these failures, but ultimately these financial
failures showed up on the bottom line. The relevant failings
of the Enron management was mismanagement, their crimes had
to do with violating rules and not with greed according to
the dictionary definitions. However, the dictionary
definitions are defective because what people have in mind
in the use of the term greed is an inordinant desire for
wealth leading to a violation of moral or legal rules. No
one classifies the Beatles as being greedy even though they
made a lot of money and consciously put forth effort to do
so. Ivan Boesky made a lot less money than the Beatles but
he was classified as being greedy because he violated the
rules. The salaries and stock options received by the Enron
management were set by the board of directors of the
corporation. They may have been high, particularly in
relation to the quality of the management performance, but
they were not what produced the collapse of Enron. The
illegal acts were carried out to stave off collapse rather
than what caused the collapse. The collapse came as a result
of management errors, management errors that were driven by
unjustified overconfidence.
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