Why did Enron go bankrupt?

Answer 1

For the petrol price

Answer 2

Greed and inability to face accumulating losses that was masked in the financial statements (f/s) by merging the loss making project into a larger division. (This means the f/s was no longer reliable and constituted fraud.) The board, sustained with the illusory accounting manoever, lived on hope of the energy commodities to turn the loss around.

Precursor to the event:
"Ambition before ethics came only two years later, when Lay had to shut down an oil-trading unit because a rogue employee had made a huge bet which cost the company $85 million. The trader went to prison, with Lay insisting that the incident was isolated." (Ref 1. and other related articles.)

Checks and Balances: Non-existent hence late detection as the losses escalated.
- Independence Rule: Arthur Andersen (AA) received $1 million a week from Enron;
- Independence Rule: AA's staff retirement ground was Enron, as often joked;
- Enron traders drove up energy prices during California blackouts;
- No Revenue to Cost Matching concept: Enron’s annual report, Lay disclosed that “mark-to-market” method of reporting was used. This means it books all its expected profits over the lifetime of a 20-year contract upfront. Any change in the expected profits would have to be booked as an unexpected loss.
- Andrew Fastow, the former chief financial officer, claimed that four banks devised structures to help hide losses;

Due to the lax reporting and poor internal controls of the company, this gave rise to SOX 404 that was supported by the likes of Mr Alan Greenspan. Enron and Worldcom are just the tip of the ice berg as there are many companies whose reporting has difficulty with close scrutiny.

However, some source over the past 2 months reported that internal controls had not completely failed which exonerated AA staff, of which my heartfelt sympathies reach out to. Some of the top brains and of which some hailed from top schools, such as Yale and Stanford, may be type cast by broad brushing the unfortunate events thereof.

Answer 3

.

You have a very good question here.

Enron was involved in a very dangerous game. They floated fake returns on their balance sheet and hid money they were not really making. Essentially, this is called, "COOKING THE BOOKS".

I ran into LAY about 12 years ago on the golf course. I would say from the way he was keeping score on his card, this man had problems from the "get-go".

Take some time to read reports about this individual. Some people deserve to be hung for what they do to retirement money of hard working individuals. In this case, it's good to see guilt ate away at him and he finally passed away.

Answer 4

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Answer 5

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Answer 6

Why Did Enron Go Bankrupt

Answer 7

Because the corrupt physio-paths at the top of this pyramid stole millions from investors. I could go into a tyrant but refrain from doing so. You asked a one line question, I give you a one line answer.

Answer 8

Stolen money taken from the stockholders, who sued later on. There was a debt from the get-go. Disorganized history of money transfers.

Answer 9

Greed, plain greed. Bunch of swindlers.

Answer 10

Because those corporate sleeze balls were cookin the books and robing the company.

Greed!!!