Enron’s Collapse and the Emergence of a New Magnitude of Ethics within Corporate Governance

Abstract

In this study, it is argued that the collapse of a single company – Enron – in the USA represented one of the most crucial factors underlying the emergence of ethics with a new dimension in the global business strategy. Enron, one of the most profitable companies in the USA in 1990s, experienced a completely unprecedented disaster and the ensuing investigations revealed that a lack of ethical integrity among the high officials was one of the most crucial reasons for the downfall of such an established company. Shortly after Enron collapse, a number of companies in different countries faced similar consequences and a crucial factor that they all appeared to share was unethical practices. The core aim of this study is to explore how the think-tanks in the corporate world made a quick response regarding the development of the ethical practices within the activities of corporations and how ethics gained greater magnitude within the administration of business activities. To achieve this aim, we undertook a comprehensive content analysis of the relevant secondary data substantiated by a Focus Group Discussion (FGD) attended by academics working in the field of corporate governance, in order to gain relevant insights in the study objectives. The scholarly views of the individuals who participated in the FGD, we believe, can add value to our results by enriching the study. The study findings suggest that the downfall of Enron immediately and hugely contributed towards raising the profile of ethics and the introduction of a series of ethical codes regarding corporate performances.