Ethics in Accounting - Enron (History and Background of Enron) - Essay Example
Lay was named the chief executive officer in 1986. This is when the company adopted the name Enron Corp. During the merger, Enron had incurred a huge debt and lost its executive rights to pipelines as a result of deregulation. In 1987, the company realized that it had made a loss of close to $ 1 billion, it worked the loss down to $ 142 million, and the loss made the company adopt a different strategy in order to cushion itself against price fluctuations (Lucian & Cristina, 2007).
Jeff Skilling, a consultant hired by the company, came up with a new business plan that would help the company generate earnings. This new approach called for the creation of gas banks where Enron Corp bought gas from different suppliers and sold it to consumers (Thomas, 2002). Enron assumed the associated risks. The company started to venture into other business areas beyond the natural gas and pipeline.
