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Enron failed because they had no regard for the consequences of their actions. Enron is a classic example of management's disregard for the common man while solely being focused on profits.

Enron became essentially a trading company for commodities and utilities primarily. They would buy utilities directly from suppliers and sell them to consumers and municipalities, eventually becoming very skilled with this practice. Enron ended up being a very significant distributor of utilities and commodities, controlling large swathes of energy on the West coast in particular.

Enron began to spend recklessly in an attempt to gain as much market share and stock of commodities as possible, reaching out into metals, water, and many other resources. Because of this, it began to go into debt, especially when some of those markets began to diminish. Enron decided to cover up its economic failings by fixing their accounts through the creation of Special Purpose Entities and other items that could be removed from the balance books. They covered up their debt, making them seem much more financially solvent than they truly were. This was an act of fraud that eventually led to their dissolution by the Securities and Exchange Committee.

During their downfall, they defaulted on many loans, allowing power and utilities to be shut down throughout their service areas. Because of this, many consumers went without power and resources throughout Enron's service region.

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Enron failed because its management took too many risks without thinking about the consequences.

It all started when Kenneth Lay created Enron Finance Corp. in 1990 and hired Jeffrey Skilling to head this new division. Skilling had proposed that Enron buy gas from suppliers and sell it to consumers. Enron Finance Corp. was in charge of trading the gas. For a while, this model worked, and Enron established itself as one of the top energy companies in America.

Skilling slowly climbed up the ranks, and by 1996, he was appointed the Chief Operations Officer at Enron. He was an ambitious man and managed to convince electricity suppliers to sell electricity to Enron for trading purposes. As luck would have it, Enron also became successful in trading electricity. Riding high on success, the company became greedy and made deals without thinking about the consequences. It began trading coal, steel, water, and any other thing Enron employees could get their hands on. The firm entered into deals without considering its finances.

It borrowed recklessly and barely made any profits on its ventures. Using mark-to-market accounting, the company hid its financial losses. It would report profits based on future projections instead of what it made. In the end, the debt became too much for the company to handle, and it filed for bankruptcy in 2001.

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Between 1985 and its bankruptcy in 2001, Enron was a relatively important energy and commodities services company based in Texas. Its failure came as a result of several serious, intertwined ethics scandals which managed to hide the company's unsustainable business practices from regulatory and shareholder scrutiny. Once the company's dire situation was revealed, it was unable to raise the funding or capital to continue its existence due to the simultaneous revelation of its criminal activity.

First, Enron published misleading accounts of its income and assets in its annual reports, overvaluing assets, inflating income, and—in some cases—claiming the existence of non-existent properties.

Second, it used illegal accounting tricks to cover its fraud in reporting misleading financial information. For instance, the company would build a new power generating plant and then credit projected profits from the plant to its operating income before any such profit had been realized. If the actual revenue derived from the operation ended up less than projected, the operation would be moved to a shell corporation to mask the loss. Shell companies were also used to move money between Enron and its banks and create the appearance of trading activity.

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The primary reason for Enron’s fall can be classified as ethics scandal and corporate governance weakness. Several charges leveled against Enron in the court of law include involvement in securities fraud, conspiracy to inflate profits, and generally and deliberately nurturing a corrupt corporate culture. These charges revolve round ethics scandal and corporate governance weakness. However, none of these offences can be said to involve breaking the law unlike Arthur Andersen who was charged for criminal offences. Besides, Enron did not contravene any accounting principle but rather stretched applicable principles to the limit in recording transactions; that is, introducing complicated accounting treatments such as the mark- to-market accounting and creation of off-balance sheet partnerships or special purpose entities (SPEs). This is what has become known as creative accounting or earnings management.

Enron’s ethics scandal relate to management’s deceit of its employees to continue to buy shares in the company even when they know that the company has dwindling prospects.

Some common cases of weakness in corporate governance were the conflict of interest involving some key officers of Enron who also served as principals of these created SPEs, and related party transactions authorized by the chairman.

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Enron failed because much of its success was built on accounting and business practices that concealed the actual financial health of the company.

As Enron grew, it created many shell companies with which it formed partnerships.  Enron used these partnerships to make it look like it was doing better than it really was.  It could put its debts on the books of the shell companies and thereby not have them show up on its own books.  These sorts of practices were abetted by the accounting firms that audited Enron and did not call them on these practices.

Because of these practices, Enron looked like a booming company and its stock prices rose.  Eventually, though, the whole system was uncovered and investors began to divest themselves of Enron stock.  The price of Enron's stock plummeted and Enron came to be worth essentially nothing.

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