Discussion and responses

Holley W Discussion

What comes to mind when thinking about unethical leadership is Enron. From 1998 through 2000 Enron went from a 31-billion-dollar company to a 100-Billion-dollar company (Ferrell, Fraedrich & Ferrell, 2013). On December 2, 2001 Enron claimed Chapter 11 bankruptcy (Wasted Energy, 2001). “Enron’s culture encouraged flouting the rules in pursuit of profit” (Ferrell, Fraedrich & Ferrell, pg. 396, 2013). Jeff Skilling, the CEO of Enron, was convicted of fraud, conspiracy, misrepresentation and insider trading (Ferrell, Fraedrich & Ferrell, 2013). According to Premeaux, Skillings and Lay brought down Enron through their unethical behavior (2009). Likewise, they destroyed the financial security of the employees (Premeaux, 2009).

“Since managers are the link among labor, shareholders, suppliers, and customers, their ethical or unethical actions are critically important (Premeaux, 2009). The ethical direction and health of an organization are directly linked to the behavior of the manager (Hyman et al., 1990). These leaders showed a great deal of unethical behavior and have since been convicted for their crimes and wrong doing (Ferrell, Fraedrich & Ferrell, 2013). Through the unethical behavior of Enron, a new policing body was created to ensure it is more difficult for the wrong doing to transpire. In 2002 Congress created Sarbanes-Oxley Act to legislate the ethical behavior of publicly traded companies and their audit firms (Rockness & Rockneess, 2005). Because of Enron all publicly traded companies must comply with the multitude of rules that make up the Sarbanes-Oxley Act (The Laws That Govern the Securities Industry, 2013).

Reference:

Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2013). Business Ethics: Ethical Decision Making and Cases. (9th ed.). Mason, OH:South-Western Cengage Learning. (ISBN—13: 978-1-111-82516-4, ISBN—10: 1-111-82516-5)

Hyman, M. R., R. Skipper and R. Tansey: 1990, ‘Ethical Codes are not Enough’, Business Horizons 33(2), 15–22

The Laws That Govern the Securities Industry. (2013, October 01). Retrieved February 17, 2018, from https://www.sec.gov/answers/about-lawsshtml.html#sox2002

Premeaux, S. (2009). The link between management behavior and ethical philosophy in the wake of the enron convictions. Journal of Business Ethics, 85(1), 13-25. http://dx.doi.org.saintleo.idm.oclc.org/10.1007/s10551-008-9745-9

Rockness, H., & Rockness, J. (2005). Legislated Ethics: From Enron to Sarbanes-Oxley, the Impact on Corporate America. Journal of Business Ethics,57(1), 31-54. doi:10.1007/s10551-004-3819-0

Wasted energy. (2001, December 08). Retrieved February 17, 2018, from http://www.economist.com/node/895651