Tarun Aswani

Smartest Guys in the Room Essay

The Enron scandal took a toll not only on the victims within the corporation, but on business and ethical operating procedures in general. At first, this scandal being with suspicious trading on oil market stocks. Enron founder, Ken Lay, wholeheartedly denies knowledge of these gradings after Enron’s reserve funds are depleted. This was the beginning on a slippery slope of wrongdoings by Lay. To cover up for himself, he cleared house of the illegal traders and hired a new CEO in Jeff Skilling. With this I believe that Lay was trying to outsmart the employees, investors, and auditors into thinking that the illegal threat was now removed and with the new hire of Skilling, Enron would be able to redeem itself. In retrospect, the hire of Skilling further regressed Enron from being an ethical and profitable company. The illegal accounting practices ad Darwinian corporate environment led to the beliefs that anything and everything make outsiders believe Enron was profitable was fair game. This mentality leads to aggressive investments in failing business such as broadband technologies and trading weather commodities. However, due to Skilling illegal accounting practices, Enron still shows profits, which are actually nonexistent. In our earnings management handout we can relate this information of accounting manipulation back to the Enron scandal in the Smartest Guys in the Room. In the simplest forms of manipulation,