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Financial Scandals

Financial Scandals

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Published by kowilliams1974

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Published by: kowilliams1974 on Jul 03, 2010
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Financial scandalsRunning head: FNANCIAL SCANDALSFinancial scandals and their impact on business loyaltyKeith O. WilliamsLiberty UniversityBUSI 472Dr. Julia McMillanMay 6, 20091
Financial scandalsAbstractThe topic I proposed to write a paper on is "Financial scandalsand their impact on business loyalty". In this paper, I willattempt to uncover lack of loyalty among such companies such asEnron, MCI WorldCom, and Martha Stewart Living Omnimedia, Inc asit relates to corporate finances. In today’s financial market,top executives across the country are looking for ways toincrease their personal wealth without any concern for itsclients, shareholders, and employees. Corporate greed causecompanies millions of dollars in losses as well as unemploymentand benefits of their employees. It’s you ever wonder canpeople ever just the company they work for without fear oflosses and unemployment. What does it really means to haveloyalty and trust in your company to make you feel apart of thecompany and care about its success.2
Financial scandalsFinancial scandals and their impact on business loyaltyThe first company we will examine is Enron, a utilitysupplier located in Houston, TX. The corporation wasfounded in 1985 after US Congress passed a law ordering thederegulation of utility companies, making competitionpossible and helping companies like Enron successful.Enronwas considered one of the leading electricity, natural gasand communications giants that employed over 21,000 peopleand claimed revenues of $101 billion in 2000. It was alsolauded for being an exemplary employer and to be a greatplace to work. It turns out that much of that reputationand revenue was completely fraudulent. In fact,Enron’saccounting firm Arthur Anderson was accused of wastingmillions of dollars on unknown partnership deals thatcaused Enron to file bankruptcy in 2001. Many of Enron’scompany debts and revenue was not recorded in theirfinancial books, misleading investors out of millions ofdollars. Stocks had dropped from $99 a share to a low $0.50a share. The company lied about its financial position inorder to keep financial ties to their investors which beganto worry when stocks fell. The scandal compelled Congressin 2002 to pass the Sarbanes-Oxley Act, the most sweepinganti-fraud legislation ever, and companies are paying3

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