1. How can the theories of leadership influence on organizational culture 2. What can be done to reduce this type of unethical leadership in the future?

Unethical Leadership at Enron Enron Corporation is a United States Of America (U.S.A.) firm that experienced the biggest bankruptcy and stock fall in U.S.A. history in 2001. When InterNorth acquired Houston Natural Gas in 1985, the firm was established in order to build the nation's largest chain of pipelines for natural gas. Enron, renamed in 1986, evolved from a gas-pipeline company into a massive natural gas and electric power trading enterprise in the 1990s. Early in the 1990s, the U.S. Congress passed a slew of legislation that deregulated the distribution of natural gas, and the firm forfeited its sole authority to run its pipelines. Enron evolved itself into a trader of energy speculative products with the guidance of Jeffrey Skilling, who started out as a counselor and ultimately rose to the position of chief operating officer (CEO) at Enron. It ranked as the 7th largest American firm in 2000. Enron quickly gained control of the natural gas contract market under Skilling's direction, and the business began to make enormous profits from its trading. With projected revenues in 2000 exceeding $100 billion, Enron Corporation recognized as a multinational corporation by all measures. But in the 1990s, Enron and its accounting firm, Arthur Andersen, were the subject of severe charges. These allegations contained dishonest accounting practices with deceptive consequences, which were ultimately shown to be legitimate. From almost $90 a share to just nickels and dimes, Enron's stock price plummeted. Arthur Andersen, among the largest accounting companies around the world at the period, as well as Enron Corporation both failed as a result of the controversy. Enron's collapse began during the late 1990s when the company's profitability started to decline as a result of rising competition in the energy trading market. Corporate leaders started to depend largely on unethical accounting methods when stockholders exert pressure on them. Using sophisticated monetary operations that are part of structured finance approaches, dubious company actions were shielded. Enron established autonomous partnerships and auctioned its assets to them, which allowed it to turn its debt-ridden loans and assets into revenue and leads Enron to unethical practices. Enron also recorded anticipated long-term trading revenue when the agreements were executed, although the revenue estimates were frequently exaggerated and unduly optimistic. Skilling succeeded Lay as Enron's CEO in February 2001, although Lay continued in his role as chairperson. As Enron's reputation as a trading organization changed, Skilling started to alter the company's management style. He began his search for the most talented and sharpest analysts, enlisting colleagues from the top MBA programs in the united states and vying for expertise with the biggest and most prominent investment banks. Enron lavished its employees with a vast list of financial compensation, including as concierge services and a corporate gym, in return for their demanding commitments. However, Lay took over as CEO after Skilling abruptly quit in August. When several analysts started looking closely at Enron's publicly available financial accounts in the middle of 2001, the magnitude of the problem started to become evident. Substantial quarterly deficits were recorded in 2001 as a result of one partnership arrangement being accurately recorded by Enron's independent auditor, Arthur Andersen. Enron's share price dipped as a result of those losses and the following restatement of its profits and debt. The company gave the special economic vehicle access to a proportion of its assets with increasing market values in exchange for accepting money or bonds. A subsequent use of such stock by the special purpose entity was to cover an investment that appeared on Enron's financial statements. As a result, the counterpart risk was lowered using a special purpose entity. Although the creation of special purpose vehicles cannot be deemed illegal, when compared to debt securitization processes, it may be deemed to be ineffective. Fewer people were aware of the complexities of the transactions carried out via special purpose companies, despite Enron disclosing their presence to the general public and investors. Enron made the erroneous assumption that the stock prices would increase and that the hedge funds wouldn't lose their value or collapse. The special economic entities' sole capitalization source was the shares of the organization, which posed the greatest threat. In the event that the firm is undermined, the special economic entities won't be capable of safeguarding against the falling market value of these kind of shares. In relation to the special purpose vehicles, the Enron corporation had more substantial conflicts of interest. Other doubters began to show up around April 2001. Many observers criticized Enron's disclosures for their lack of accountability. Enron experienced a significant cash shortage as a result of hazardous deals it had undertaken in disappointing investments of numerous type over the spring and summer. Top leadership, who had been dumping Enron stock in the bull market since August 2000 and voting with their feet, proceeded to leave, making a total profit of tens of millions of dollars as a result. Enron stunned investors by announcing in October that it would report a third-quarter loss of $638 million and face a $1.2 billion hit to shareholders equities. Enron experienced a steep decline as more information about the accounting irregularities came to light. As a result of Fastow's termination, the share price of the corporation fell sharply, from a peak of $90 per share in mid-2000 to the less than $12 at the start of November 2001. By consenting to be procured by Dynegy that month, Enron tried to avert disaster. Nevertheless, Dynegy withdrew from the agreement a few weeks later. Enron's stock price dropped to less than $1 as a result of the announcement. Enron sought Chapter 11 bankruptcy protection on December 2, 2001. The 2000–2001 California energy crisis led to accusations against Enron of manipulating the utility prices. Evidence indicates that Enron traders set up the power supply contracts with California and that its affiliates participated in fraudulent trading among themselves to raise energy prices. Enron created the illusion of causing electricity congestion, which led to the generation of false charges when it then pretended to ease the fictitious bottleneck. The financial failure of Enron had significant and wide-ranging effects on the financial investment industry. Over 20,000 employees were laid off as a direct consequence of the unethical actions of Enron's leadership and the company's dishonest and compromised financial experts. The world economy suffered tens of billions, Jeff Skilling, the former Chief executive of Enron, is reportedly serving prison time and his son had just been confirmed deceased. Ken Lay, the former CEO of Enron Corporation, hanged himself in addition to being the former CFO of Enron who is now in jail. A number of Enron executives were charged with various crimes and received prison sentences as a result. The fact that Skilling and Lay were both found guilty in 2006 on a number of conspiracy and fraud-related offenses is noteworthy. Skilling received a punishment of more than 24 years at first, but only lasted 12. Before being given a sentence, Lay, who'd been facing more than 45 years in prison, passed away. Fastow also pleaded guilty to the charges in 2006, received a six-year prison term, and was freed in 2011. The company's accounting firm, Arthur Andersen, was also damaged in the bankruptcy. After the Securities and Exchange Commission started looking into Enron in late 2001, Arthur Andersen was suspected of witness tampering when it decimated case-related data. After being investigated by the SEC for its participation in the bankruptcy of Enron, Arthur Andersen, among the top 5 accounting firms, eventually lost both clients and partners. The firm's demise was sealed in 2001 when it was found guilty on conspiracy charges of obstructing prosecution. Additionally, Enron and Andersen were also the targets of a large number of shareholders civil lawsuits. The majority of shareholders did not get their money refunded, and workers only obtained a portion of their 401(k)s, despite the fact that some lawsuits were fruitful. The crisis led to a flurry of new legislation and regulations that are intended to improve the integrity of financial statements for publicly listed businesses. The Sarbanes-Oxley Act (2002), the most significant of those regulations, set stiff consequences for falsifying, changing, or deleting financial documents. A further prohibition imposed by the law was the practice of auditing firms simultaneously serving the same clients as consultants. The unforeseen repercussions of unethical practices by corporate leaders, financial experts, and accounting professionals companies were painfully brought into focus once again. The accountancy profession has been subjected to intense scrutiny from governments, governing bodies, stockholders, and investors ever since Enron's downfall and other well-publicized fraudulent practices, the banking sector's restructuring, and a plethora of other events. It shouldn't sound surprising given the unexpected effects of immoral actions taken by business executives and their financial experts. Thousands of workers and shareholders suffered greatly as a result of the largest and also most complicated bankruptcy case in American history. Loyalty and ethical stewardship are critically and significantly related. The enormous share market returns experienced over the past 20 years were skipped by a sizable portion of Americans. A just over half (55%) of the populace acquired equities in 2020, either directly or through bank accounts like 401Ks and IRAs. According to the U.S. Federal Reserve's Survey of Consumer Finances, that is a decrease from 60% during the year 2000. Although the massive deception by Enron has a negative direct influence on the market, Main Street USA also seems to have suffered from negative indirect effects of government measures. But now that laws have been put in place, CEOs and CFOs are held accountable personally for the accuracy of the information on the balance sheet and the income statement. The law was adopted in 2002 and it has been in effect since then. It has, however, also received scathing condemnation. The Department Of justice and the Securities And exchange Commission were already given the authority to pursue CEOs who falsified their financial records, so the amendment wasn't really necessary. The legislature's immediate impact was to burden public corporations with a mountain of paperwork and discourage leaders from taking calculated risks. Additionally, there is a lot of uncertainty in the legislation regarding what is permitted and what is not, as well as the eventual penalties for non-compliance. For both aspiring and seasoned investment advisors, the Enron scandal has significant learning implications. The scandal serves as a reminder of the need of sound corporate governance in enabling any company to operate profitably. It also sheds light on the inappropriate use and application of accounting principles. Any abuse could have grave consequences or affect the viability of the company. Today's relevance of Enron remains unchanged from that of 20 years ago. It's the tale of morally upright individuals who suffer tragic consequences. People who let wealth and position compromise their morals and judgement. We should all be reminded that we are each responsible for our own acts by this. Arguably, Enron case was a massive hit or setback for trading markets and people's trust. A credibility gap exists since between stakeholders and the quality of accounting as a consequence of recent, wide range of business scandals. Many common Americans were hesitant to make investments following the bankruptcy of Enron. After all, what investments could investors entrust if a huge company like Enron could screw up.

1. How can the theories of leadership influence on organizational culture

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