The Smartest Guys in the Room Summary

The Smartest Guys in the Room

The movie called the smartest guys in the room, narrates the process that how does Enron Corporation, one of the world’s major electricity, one of the world's major electricity, natural gas, and communications companies, with claimed revenues of nearly $111 billion during 2000, went bankrupt eventually. In this film, the interviewers narrated the process of bankruptcy. This is a famous scandal in accounting area and there are lots of illegal behaviors related. We can learn a lot from this scandal in order to behave legally and avoid losing money.

Facts: Two years after the corporation founded by Kenneth Lay, there were two traders began betting on the oil markets and transferred the money they earned to the offshore accounts. Instead of fire them, Lay encouraged them to use this unethical way to make money for the corporation. Finally the two traders were fired since they gambled away Enron’s fortune. Then Lay hired Jeffrey Skilling as the new CEO. They began to use mark-to-market accounting, which allowed them to report the potential profits instead of the actual profits. In addition, the new CEO’s aggressive management idea which fires the bottom fifteen percent employees gave the employees incentives to make the profits better than the actual profits. Skilling hired more people to help him make money for Enron Corporation. Under the bull market, executives pushed up the stock prices and cashed in their multi-million dollar options. Even they suffered the poor performing, they still portrayed Enron was profitable. In 2000, Enron became one of the few Internet-related companies and was named as the “most admired” corporation by Fortune magazine. However, Enron was still questioned irregularities about the company’s financial statements and stock value. These concerns indeed existed in Enron’s financial statements. In order to cover the debt and cook the book, the CFO Andrew Fastow, created a network of shell...