College Essay Examples

Enron: The Smartest Guys in The Room

In the documentary, “Enron: The Smartest Guys in The Room”, Enron is a vast energy management company that turns into a house of cards (Gibney, 2005). The company has an existing code of ethics that is perceived as strong yet fails to impact its daily operations. Enron company collapsed in December 2001 (Gibney, 2005). There was a scandal that made it the largest bankrupt company and stock collapse in American history. In the Enron company, top managers practice the arrogance that resulted in a massive financial crisis, possible in most American firms today. Like most of today’s credit crises, Enron’s downfall was based on losing trust and betrayal. The leader’s unethical behaviours affected everyone, including utility workers, whose pensions were exhausted when the company went bankrupt. The documentary showcases Enron as hardly a company but a vast pyramid scheme. Employees saw their retirement money being mishandled. Stockholders in the company lost everything since all the managers did lying about profitability through accounting tricks (MacCarthy, 2017). Top leaders Kenneth lay, and Jeffrey Skilling is very dishonest while employees choose to remain ignorant (Gibney, 2005). This essay focuses on conducting a critical analysis of Enron’s downfall as a giant company by looking at practices and events that resulted in its dysfunction, as outlined in the documentary and criticized by outside research. 

An Overview of The Enron Practices That Eventually Led to The Disfunction of The Organisation

An organization requires a constant, positive and nurturing culture for it to survive. Members should have shared beliefs, values, standards and attitudes which ensure constant corporation, honesty and integrity (Vinten, 2002). Although the Enron company had a culture, the culture was unethical and unproductive. Enron’s top management established a toxic organizational culture through the utilization of dishonesty, corrupt initiatives and greed. The executives failed to create good working relationships with its workers, whereby workers were fired whenever they questioned the practices and decisions of their managers, while others were ignored. The customers mattered less to Enron leaders, who focused more on enriching themselves (Vinten, 2002). The top managers were greedy and cared less about the efforts workers made to enhance profits. They created a culture that encompassed a lack of a shared vision. When the company faced financial problems, the management created dishonest accounting to cover the losses. They utilized structured financial methods to cover both gains and losses in the organization. The company lacked transparency, which bred negativity and conspiracy between employers and workers. 

 Kenneth Lay, the founder of Enron, served as both CEO and chairman. He worked alongside Jeffrey Skilling, the president and chief operating officer of the company, to establish an unethical working atmosphere (Gibney, 2005). Kenneth Lay created fear among his workers by firing and hiring others, making them scared of challenging his leadership. He lost track of the company’s objective of selling natural gas and started venturing into other businesses like oil, water and broadband. Jeffrey Skilling was a bad leader who depended on his past attainments to manage the company without realizing that the world is ever-evolving and the way to handle business is ever-changing. He had a tremendous ego that prevented him from learning and listening to others. Other leaders, including Andrew Fastow, who worked as the Chief Financial Officer, created false financial statements and intimidated the auditing team into ignoring core business practices to enrich the top managers. Everyone in the company decided to sell their stock, leading to bankruptcy. 

Reaction To the Events That Took Place Within the Company as Depicted in The Documentary

While watching the documentary, at first, accounting schemes seem exciting. Enron leaders engage in accounting fraud which encompasses projecting earnings as current income and establish offshore firms to hide the debts by the company. Given the efforts leaders make to hide their illegal activities, the company’s downfall is almost unexpected. The techniques of fraud used by Jeffrey and Kenneth, and other leaders are very complicated that any lay worker can hardly comprehend, meaning they could only remain less aware of the shadiness of their company (Vinten, 2002). The documentary showcases the rise and fall of Enron’s stock market and also scandals that lie behind the success of the company. The film builds on the company’s scandals to showcase how it manipulates the public into believing in its fictional greatness. 

Jefferey Skilling is the catalyst of both Enron’s most extraordinary attainments and its failures. Jefferey establishes an arrogant culture, introduces the company to a mark to market accounting and a Performance Review Committee (PRC), where at least 10 per cent of staff are laid off each year (MacCarthy, 2017). Jeffrey reduces himself entirely to a macho risk-taking businessman and interests himself with other macho managers who are referred to by the film as, guys with spikes”. It is always the most famous company in the globe that fall off very fast. When watching the documentary, I gained many insights on how a huge company can easily fall based on greed. The company was always celebrated as one at the core of America’s business and a gas pipeline that reinvented itself as a high-tech firm in an ever-changing market. As a person who intends to venture into business, Enron’s case is very educative. 

The company which stood at the top of the industry forgot to identify that the world kept going round and round. The company became more cautionary than epic as it crashed along with its stock price, and serious questions emerged concerning its bookkeeping. The documentary sheds more light on the importance of positive work culture, the importance of maintaining a clear mission and vision in an organization and best practices for managing a company’s stock price and proper bookkeeping. While a company might be doing great, it is easy to fall back to its feet and even lower. 

Opinion About Scandal

What surprises me about Enron and its leadership is how blinded they were to think that faking figures and acting profitable would last forever. It shocks me that learned and knowledgeable people like Skilling failed to identify and foresee the company’s downfall as a result of fraud and unethical behaviours. I feel bad that investors and innocent workers were affected by the greed of their leaders. As much as their money was refunded through a court order, it did not happen timely, and people who had plans with these investments were hugely affected and misguided. I also feel bad that a minor issue like the culture of a business resulted in the downfall of Enron. The conflicts of interest between Arthur Andersen’ two roles of auditing and accounting, lack of attention from the board of directors and dishonesty about the health of the business were all a result of poor organizational culture (Dooley, 2002). What stands out as critical for me in this scandal is the fact that senior managers held a belief that Enron was the best at anything it did, such that they forgot that failure is a part of life. Due to this belief, they had to do anything to protect their reputation and compensation as the most successful business leaders in America. It was a sad situation since they had to cover up their failures when some businesses performed poorly. 

I disagree with the decision by Skilling and Andrew Fastow to alter the business strategy and Enron’s corporate culture. When the stock kept rising, and investors became more and more wealthy, the board of directors and the investment community could not question top leaders closely. They did wrong by getting rid of Enron’s initial code of conduct and allowing Fastow to maintaining a conflict of interest through offshore companies (Dooley, 2002). They had few analysts who failed to advise them on the importance of clients staying out of Enron. In my opinion, Jeffrey and Kenneth could have established a culture where the board of directors paid closer attention to how the company made and spent its money. The board members in Enron could not approve what was designed and proposed by the management. 


The Enron bankruptcy scandal is the most significant in the history of the United States. The scandal was that of corporate collapse due to failures in many loan banks and savings. The greed of leaders in the company resulted in bankruptcy. The scandal still demonstrates the urgent need for reforms in corporate governance and accounting in American firms and also ethical culture and quality in entrepreneurship in general. One reform should involve laws that make boards, employees and shareholders more responsible for the initiatives of the business. Board members and employees in any business need to pay close attention to how the business is treated. Enron’s accounting irregulating have resulted in the formation of accounting regulations that prohibit illegal ownership of both consulting and auditing services by a firm. Most accounting businesses are now moving into several of their enterprises. Generally, business prospers when there is attentiveness, integrity and truthfulness among top managers. 


Dooley, D. V. (2002). Financial fraud: Accounting theory and practice. Fordham Journal of Corporate & Financial Law8, S53.

Gibney, A. (2005, April 22). Enron: The Smartest Guys in the room. Documentary,

MacCarthy, J. (2017). Using Altman Z-score and Beneish M-score models to detect financial fraud and corporate failure: A case study of Enron Corporation. International Journal of Finance and Accounting6(6), 159-166.

Vinten, G. (2002). The corporate governance lessons of Enron. Corporate Governance: The international journal of business in society.

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By Sandra Arlington

Sandra Arlington is a contributing writer to the Motley Fool. Having written for various online magazines, such as Ehow and LiveStrong, she decided to embark on a travel blog for the past 10 years. She is also a regular contributor to My Essay Writer.

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