Business Ethics

Business Ethics

Business Ethics are a set of rules or guidelines that are implemented into the company’s code of ethics to ensure trustworthy employees bringing trust to their customers, consumers, and partners. Violations of the business ethic standards in finance involve a variety of actions: “creative accounting,” earnings management, misleading financial forecasts, insider trading, fraud, excessive executive compensation, options backdating, bribery, and kickbacks (Gitman, 2009). Enron Corporation and WorldCom are two companies that chose to violate ethics which led to many employees and shareholders without jobs, retirement, or savings. Without ethics or integrity, a business will not succeed. The collapse of Enron and WorldCom has raised ethical awareness to businesses today.

Enron Corporation

Enron Corporation was an energy and utility company that grew to be the seventh largest in the nation. By the end of 2001 the company finally came to an end due to their unethical business practices.

Factors that led to downfall

Enron’s code of ethics included respect, integrity, communication and excellence. Unfortunately due to the human factor not many choose to practice these values. Greed was a major factor that led one of the top energy companies, Enron, to collapse. Since the late 1990’s Enron’s primary goal in the accounting and financial field was to keep cash flow up, hide liabilities, and keep asset values inflating.

Ethical violations

A major ethical violation in businesses is financial accounting. There will always be dishonest people who will find unethical ways to report financial information in order to become wealthy. Misleading information, insider trading, conspiracy, securities fraud, bank fraud, false tax returns, and money laundering were just a few charges that employees of Enron Corporation pleaded guilty to. The accounting practices used in Enron allowed the losses to be hidden and found ways to show their true financial statements....