Corporate governance Essay Example | Topics and Well Written Essays - 2750 words

Corporate governance - Essay Example In corporate governance, the company’s management takes a trustee’s role for other parties that have interests in the company. Corporate governance is majorly based on principles like conducting business with fairness and integrity, transparency in handling transactions, complying with laws governing operation of companies, making sound decisions and necessary disclosures, ethical issues in conducting business and responsibility and accountability towards stakeholders. There is also need to clearly distinguish between corporate funds and personal funds when managing a company. Enron Corporation was a company dealing in services, commodities and energy based in Houston, Texas state in America. It had approximately 20,000 staff members and was among the world’s major natural gas, electricity, pulp and paper and communications companies before its bankruptcy in December 2001. After 2001, it was found that the company’s financial condition was majorly sustained by a systematic, institutionalized and planned accounting fraud that was termed as Enron scandal (Sterling, 2002). The Enron Scandal that was discovered in 2001 led to bankruptcy of Enron Corporation and dissolution of Arthur Andersen, an entity that was among the five largest accountancy and audit partnerships worldwide by then. Enron is rated the biggest failure in audit apart from leading as the largest bankrupt company in the history of America by then. The case analyzes the cause of this failure in details. Lack of truthfulness. According to the report given by Kirk Hanson, the executive director of Markkula, a center for Applied Ethics, the Enron management did not give true information concerning the company’s health (Canadian Center of Science & Education, 2010). The senior executives developed a belief that Enron had to take the first position in relation to other companies and also they had to maintain their reputations as well performing executives in the United