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Ethical Dilemmas Of Enron Company

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Honesty & Integrity

Enron was extremely competitive. A company which was known for its perfection and achieving success in a cut throat competitive environment. Enron’s work culture created an environment of deception. Employees of Enron had to perform well and if they did not they would be fired.

The company hid information from its investors. It tried to project an image that the company was running smoothly and faced no financial problems. Whereas the reality was a far cry from this. Enron had huge debts in its name. This information was not disclosed to the investors. Enron’s management deliberately hid information through the use of special partnerships. It used SPE’s (Special Purpose Entities ) to hide the fact that it had huge amounts of debts. Enron used SPE’s with the goal of shielding the realities from its investor.

Enron’s auditors hid information regarding the true financial position of the company. Enron’s accounts were audited by Arthur Anderson who was Enron’s auditor. This was not wrong at that point. To employ a company’s own auditor to audit it’s own work may not be wrong according to the law at that time, but this may lead to the auditor hiding some information. Their actions were in conflict with the auditing standards accepted by the country. The auditors were expected to provide complete unbiased information regarding the company’s financial position.

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Enron’s analysts did not have complete knowledge regarding the situation of the company in terms of the company’s financial stability. Analysts gave recommendations pertaining to investments in Enron’s securities. They recommended buying securities of the company to potential investors without complete knowledge. This act of their was detrimental to the interests of the potential shareholders as well as against their profession as an investment analyst.


Enron’s Vice President of Corporate Development Sherron Watkins brought the corruption taking place in Enron to the notice of the CEO. She found irregularities in the financial reports in August 2001. She reported the wrongdoings happening in the company. She could have kept quiet and acted as if she knew nothing about this. She might have face a dilemma between protecting her job and disclosing the truth. But she decided to speak up knowing that she was putting her job on the line. She decided to disclose he truth to protect the interests of the majority at the cost of jeopardizing her future.

Loyalty Vs Truth

Sharron Watkins, the whistleblower in Enron’s case sold her stocks worth almost $50000. She decided to reveal the truth regarding the irregularities in the accounts of Enron to everyone.

Before the revelation she decided to sell her stocks for the fear that they might be of no value to her after the truth is out. She might have been looking at the greater good of the employees, stakeholders but she put herself first in this situation and took steps to make sure she did not suffer any loss before taking action against Enron

Ethical Failures

Lack of Integrity

  • This is one of the most important factors which contributed to the downfall of Enron.
  • Top level management, auditors, employees etc. were responsible Enron’s failure.
  • The people associated with the company hid the truth in order to make sure they were shielded and continued to benefit from the position they held.


  • The financial statements were manipulated.
  • Potential investors were not told about the fact that the company was not financially sound. Information was held from them deliberately.
  • Employees in order to gain better scores so as to not be fired decided to

Misusing Accounting Provisions

  • Enron used Special Purpose Entry to cover up their losses.
  • It used fraudulent methods to show a better image to the potential investors, existing shareholders.
  • They hid the huge amounts of debt taken in the name of the firms


  1. The Rise and Fall of Enron: Ethical Issues. (2018, February 22). Retrieved July 28, 2019, from website:
  2. Enron’s Ethical Dilemma. (n.d.). Retrieved from
  3. ENRON, ETHICS, & THE DARK SIDE OF LEADERSHIP. (2016, July 3). Retrieved from
  4. Enron’s ethical dilemma – Running head ENRONS ETHICAL DILEMMA Enron’s Ethical Dilemma Students Name Class Instructors Name Institution Affiliation 1.
  5. Essay on Ethics and Enron.

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Ethical Dilemmas Of Enron Company. (2022, Jun 16). Edubirdie. Retrieved January 29, 2023, from
“Ethical Dilemmas Of Enron Company.” Edubirdie, 16 Jun. 2022,
Ethical Dilemmas Of Enron Company. [online]. Available at: <> [Accessed 29 Jan. 2023].
Ethical Dilemmas Of Enron Company [Internet]. Edubirdie. 2022 Jun 16 [cited 2023 Jan 29]. Available from:
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