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CAUSE AND EFFECT OF ENRON COMPANY TO UNITED STATES OF AMERICA

Economy is all about the movement of money. The downs of the economy of a country really give a big impact to people in it, and this is called economic crisis. One of the examples of the world’s largest economic crisis is Enron scandal. The causes of downfall of this company really affect the United States of America.

Since Enron Company use mark-to-market accounting process, investors were often given false or misleading reports due to the large discrepancies of attempting to match profits and cash. The dishonest of the employees to manage the business caused the company to face bankruptcy. Lastly, Enron Company made a habit of booking costs of cancelled projects as asset.

The negative impact that obviously can be seen from this scandal is that many employees lost their jobs. To make matters worse, many of these employees were prevent from selling their stock even as the stock price declined in value. Lastly, they may lose most of their entire life savings as the ongoing financial viability of the auditing firm is in dangerous situation.

Besides that, the scandal caused the dissolution of Arthur Anderson, which at that time was one of the world's top accounting firms. New rules and regulation were also made for big business to avoid such this problem. Last but not least, this scandal had caused some murder and suicide among the employees because they faced a lot of pressure.

As a conclusion, economy is such a big area to be worked on. It controls a lot of things especially when it comes to the income of your country or even yourself. We can learn that the crime of gaining money or financial benefits by a trick or lying will never pays. Or else, if you do not understand about economy well, do not invest in it.

NUR FITRIAH BINTI KHAIRUDDIN (103462)