Enron Scandal ; Agency Problem case Study PDF

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This is about corporate Collapse. A case study of Managerial Fraud...

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Introduction To Business Finance

Corporate collapse; Case Study Of Agency Problem CASE STUDY OF ENRON SCANDAL

Ahsan Iqbal BS Economics ( 3rd) 31/03/2019

ENR ENRON ON SCAND SCANDAL AL INT INTODUCTION ODUCTION In 1985, Kenneth Lay merged the natural gas pipeline companies of Houston Natural Gas and InterNorth to form Enron. In the early 1990s, he helped to initiate the selling of electricity at market prices, and soon after, Congress approved legislation deregulating the sale of natural gas. The resulting markets made it possible for traders such as Enron to sell energy at higher prices, thereby significantly increasing its revenue. This deregulation allowed energy providers to expand their approach and become more competitive. Enron diversified with these changes, it became a market maker in electric power, coal, steel, paper and pulp, water, and broadband fiber optic cable capacity. Its domestic trading and international business grew dramatically through the 1990’s.

FALL OF ENR ENRON ON In May 2000, the stock price of enron was $40 per share which went to $90 per share in August 2000.The market capitalization value of Enron went to $60 billions . In 2001, analysts said that there is something wrong with the Corporation because the shares of enron are going so high that like none of its other competitors in energy sector. In the same period in October 2001, company reveeals the loss of $618 millions and said that they were overstating their earnings since 1997. In December 2001, company filed the petition of Bankruptcy because of its sudden fall of shares which were...