The company was the rising star of the stock market. In the Fortune’s Most Admired survey, Enron was rated as the best innovative large company in America. The Downfall The scandal was the biggest bankruptcy in America history. Thousands of employees lost their jobs and retired employees have lost the funds on which they depend. It was seen as a catastrophe to investors and employees when Enron filed for bankruptcy in December 2001.
After all of those successful investments JP Morgan became so powerful that the government relied on his financial security for help. At this time, J.P. Morgan had much of the country’s wealth and the government had not yet established the Federal Reserve. JPMorgan helped the U.S. Economy from the financial crisis in 1907 by hosting a meeting with the top businessmen, the richest people in America who were called robber barons in his house in New York. He succeeded to convince them to help the companies which were going to fall down to bring balance to the market and the economy. J.P. Morgan’s established wealth rescued the economy.
On October 24 of 1929, otherwise known as Black Thursday, a record 12,894,650 shares were traded. Investment companies went into scramble as they tried to balance the market. However, the next week, on “Black Tuesday”, the stock market had officially collapsed. By then, around 16,410,030 shares were traded in the New York Stock Exchange. Billions of dollars were lost and many citizens jobs were affected from the collapse.
Worldcom was founded as a long distance provider in Mississippi region. Later on, the company started acquiring small telecommunications firms what caused a robust increase leading to over thirty seven billion revenues. The year 1999 was marked by a huge slowdown in the internet and telecommunications industries. Wall Street market reacted to this unusual decrease immediately, so the stock prices began to fall. In order to keep the investments and prevent the fall of earnings, Worldcom began to conduct fraudulent financial reporting.
Arthur Andersen’s Fall Arthur Andersen – Arthur Andersen was one of the Big Five accounting firms along with PWC, EY, KPMG and Deloitte providing auditing and consulting to corporations. It was founded on 1st December, 1913 by a Norwegian Arthur Andersen and Clarence DeLany as Andersen DeLany & Co. The firm changed name to Arthur Andersen & Co. in 1918. Arthur Andersen always maintained high standards and ethics in the accounting industry, especially till the death of Mr.Andersen. In 1914, Mr.Andersen told a client that there is not enough money in the city of Chicago to make him manipulate accounts.
AIG thought that what it insured would never have to be covered, and if it did, it would be in little amounts. But when foreclosures increased to incredibly high levels, AIG had to pay what it promised to cover which eventually caused a huge hit to AIG’s revenue stream. The AIG Financial Products devision ended up paying around $25 billion dollars in losses which caused a massive hit to the parent company’s stock price. Meanwhile, accounting problems within the division also caused losses which also lowered AIG’s credit rating. It was very clear that AIG was in danger of bankruptcy.
QUESTION 1: Introduction and Background (Ashish Pareek – H14017) Case 2.1 In our study we have tried to analyse the famous bankruptcy case of Enron. The AOL framework would help us analyse what really went wrong and to synthesize our findings. The Enron case is more than a decade old, and despite the recent global recession, does not fail to highlight the misuse of management control at large corporate houses. The Sarbanes Oxley Act or SOX as it is popularly called was an outcome of this debacle. Several other cases of financial misrepresentations were uncovered after the Enron fallout which eventually led to the collapse of large firms like Worldcomm.
The terrorist attacks in September 11, 2001 severely shook the political stability of the US resulting in a catastrophic downfall in business activities and dramatic reduction in air travel. In the aftermath of the severe liquidity crisis, the US Congress passed the Air Safety and System Stabilization Act, resulting in the 1st government bailout of the twenty first century. More than 150,000 employees were out of work and losses of more than US 31 billion ( Banber, G.J, 2009 ). Source : IATA ( ii )
As reported by Ethical Consumer, Nestlé has been voted the least ethical company in the last twenty-five years (Ethical Consumer, 2017). Nestlé is the largest food company and largest producer of bottled water in the world. Additionally, they make approximately ninety billion dollars a year by selling products like instant coffee, breakfast cereals, cat food, dog food, and chocolate bars (Ethical Consumer, 2017). Nestlé has faced several scandals throughout the years that have negatively impacted their reputation. Many of their critics have claimed that the company is extremely unethical and only focused on generating a profit.