Shipping companies listed on New Yorks Stock Exchange

Shipping companies listed on New Yorks Stock Exchange This study was based on 21 shipping companies listed in New York Stock Exchange, over the period of 2005 to 2009. On the table below the selected shipping companies are shown. Shipping Companies listed in the New York Stock Exchange DIANA SHIPPING INC NAVIOS MARITIME HOLDINGS INC 3 SAFE BULKERS INC 4 GENCO SHIPPING TRADING LIMITED 5 TEEKAY CORPORATION 6 TSAKOS ENERGY NAVIGATION LIMITED 7 EXCEL MARITIME CARRIERS LTD 8 DANAOS CORPORATION 9 AEGEAN MARINE PETROLEUM NETWORK INCORPORATION 10 FRONTLINE LIMITED 11 SEACOR HOLDINGS INCORPORATED 12 NORDIC TANKERS 13 GLOBAL SHIP LEASE INCORPORATION 14 GENERAL MARITIME CORPORATION 15 SEASPAN CORPORATION 16 SHIP FINANCE INTERNATIONAL LIMITED 17 KIRBY CORPORATION 18 OVERSEAS SHIPHOLDING GROUP, INC 19 DHT MARITIME INCORPORATION 20 INTERNATIONAL SHIPHOLDING CORPORATION 21 TIDEWATER INC This paper seeks to examine the relationship among three corporate governance mechanisms (board composition, chief executive status and audit committee) and some firm performance measures (return on investment capital, return on equity, Return on Assets and Current Ratio). Also, the essay examines the relationship among these three corporate governance mechanisms and the operating performance (Net Sales to Operating Cost) of the corporations. Part 1 Corporate Governance Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled with the objective to enhance shareholders wealth. Corporate governance also includes the relationships among the stakeholders involved and the goals by which the corporation is governed. It is supposed that better corporate governance leads to better corporate performance by preventing the expropriation of controlling shareholders and ensuring better decision-making. Corporate governance is a priority along with financial indicators when evaluating investment decisions according to investors. The majority of them are prepared to pay a premium for companies having high governance standards. On the opposite, there are also bad forms of corporate governance that lead corporations to problems. Good corporate governance is considered to be a fundamental necessity to run a firm successfully. Moreover corporate governance is a process which can ensure growth for a firm and the economy in general. Most of the selected shipping companies are foreign private issuers established in Marshal or Bermuda islands. The minority of the selected companies are U.S corporations. Consequently most of them are not required to comply with the corporate governance practices followed by U.S. companies following the New York Stock Exchange (NYSE) listing standards. However, they are required to state any significant differences between their corporate governance practices and the practices required by the NYSE according to Section 303.A.11 of the NYSE Listed Company Manual.  Furthermore almost every chosen shipping company adopts NYSE required practices, such as having a majority of independent directors, establishing audit and compensation and nominating committees as well as adopting a Code of Ethics.   NYSE requires companies to adopt and disclose corporate governance guidelines.   The guidelines should address to the director qualification standards, the director responsibilities, the director access to management and independent advisers, the director compensation, the director orientation and continuing education, management succession as well as an annual performance evaluation. However,   most of the shipping companies trade in NYSE are not obliged to comply with these rules due to that they are foreign private issuers as well as most of them are offshore. For these companies there is no obligation of complying with any corporate governance guidelines or code of ethics. Shareholders can be informed via the annual reports and Code of Ethics, both of which have been publicly filed by the United States Securities and Exchange Commission available on the companies web-sites. Corporate governance guidelines and shipping companies intend to publish an overview of the Companys gu iding principles which focuses on social issues. This Code cannot cover every applicable law or provide answers to all questions that may arise but it can set out general principles about an organization belief on matters such as mission, quality, conflicts of interest, internal reporting, privacy or the environment. Furthermore, it may define proper procedures to determine whether a violation of the code of ethics has occurred. Code of ethics and corporate social responsibility is a neglected issue in the shipping industry. Traditionally there is no reason for the shipping companies to invest in advertising or in any other activity that could improve their image. Consequently the main goal of the management of a shipping company is to attract as many as possible new clients. Any characteristic that can improve the reputation of the company is not a priority for the managers of a shipping company. Many years have passed and shipping companies were not obliged to follow some rules of social responsibilities. Fortunately, the last decade various regulations have been imposed to the operation of a shipping company, although the control mechanisms were not always efficient. Board of Directors An important aspect that influences the corporate governance is the board of directors. The board of directors plays an important role to the company operation. It oversees top management and is entrusted with the responsibility of monitoring and supervising the company resources and operation. Moreover, it undertakes the obligation of appointing a qualified person as the Chief Executive Officer and other management staff. Therefore, the board is seen as a team of individuals with fiduciary responsibilities of leading and directing a firm, with the primary objective of protecting the shareholders interests with high sense of integrity and commitment to the firm. The role of the Board is significant in designing efficient corporate monitoring and ratification mechanisms. With respect to reducing agency costs at the Board level, Boards of directors have three key decision rights: (1) Monitoring (2) Ratification (3) Reward and punishment rights. They may even remove top managers from their positions and sanction them for their decisions. NYSE rules require the size of the board of directors not to be smaller than three members. As it can be observed by the survey the size of the board of directors of the sample is between five and seven members. Although there are some shipping companies that have more than seven members in the board and some others that have less than five members. It can be concluded that the majority of the board members in the board of directors are outside directors (member of a company board of directors who is not an employee or stakeholder in the company). The role of independent directors on the board of directors is to effectively monitor and control firm activities in reducing opportunistic managerial behaviors and expropriation of firm resources. The majority of the board members are outsiders for most of the companies; some of them use relatives as well as acquaintances as board members. This indicates a tendency for the shipping companies to be governed by a closed team of people. In accordance to NYSE rules the board should have audit, compensation, and nominating committees made up entirely by outside directors. Almost all of them are consisted by the three obligatory committees opposed to the majority of the selected shipping companies that do not have the obligation to comply with the NYSE rules. The role of these committees is significant; they are assigned to evaluate the board The role of the Audit Committee The purpose of the Audit Committee is to: Monitor the integrity of the firm financial statements. Monitor the qualifications, independence and performance of the company independent auditors. Monitor the performance of the company internal audit function. The audit committee ensures that the books of the company are not fake and that shareholders are properly informed of the financial status of the firm. In this essay it is made an effort to examine the importance of the audit committee in shipping companies listed in the New York Stock Exchange. NYSE requires from a listed U.S. company to have an audit committee with a minimum of three members. But it is permitted by Rule 10A-3 under the Securities Exchange Act of 1934 that audit committees of foreign companies can have less than three independent members in the audit committee. The Chief Executive Officer (CEO) Status The Chief Executive Officer position and the whole management team is an important position to hold in a corporation. They are responsible for Operating the firm in an effective way. Preparing the annual operating plans and budgets. Establishing an effective system of internal control. In this essay it is examined the role of the Chief executive officer (CEO) in the shipping companies. There are two types of leadership structure i.e. combined leadership structure and separated structure. Combined leadership structure happens when the CEO is also the chairman of the board. On the other hand separated leadership structure takes place when the Chairman of the board is a different person from the CEO. Many studies identifying the implications of CEO duality exist. It is thought that the operating performance may be improved as a result of less debate among the CEO and chairman and/or other directors. From the sample of the shipping companies that it was taken a significant tendency cannot be provided. In some of the shipping companies the CEO is also the chairman of the board while in others is not. Part 2 Methodology The aim of this research is to figure out if the corporate governance mechanisms have an effect on firm performance. Therefore, the measurement of firm performance is primarily comprised of two factors: operating and financial performance. The data used for this research were extracted from the audited financial statements of 21 shipping companies listed in the New York Stock Exchange. The survey covers the time period through 2005 2009. The sample consists of the annual observations for the board size of every company, for the CEO status and for the size of the audit committee of every shipping company. The aim of the research is to find if these corporate governance mechanisms influence the operating and financial performance ratios. Consequently regression models have been constructed in order to prove the association between the corporation governance in operating and financial performance. Microsoft Excel and the statistical package Eviews were used so as to collect the data run the appropriate regressions and identify the results. Moreover except from the companies annual reports a lot of information was extracted through the Thomson Database. In the end panel data methodology was adopted because it combined time series and cross sectional data. The method of analysis is that of multiple regressions and the method of estimation is Ordinary Least Squares (OLS). By running the appropriate regressions via Eviews and by using Return on equity and the profit margin as the dependent variables, the results were considered inadequate. Consequently it was considered integral to proceed to further research. That is why the below financial ratios were used as dependent variables. For the financial performance: Return on equity ratio: Profitability ratio, it can indicate the management effectiveness Return on assets ratio: Profitability ratio, it can also indicate the management effectiveness Return on investment capital ratio: Profitability ratio, it can also indicate the management effectiveness Current ratio: liquidity  ratio Finally in order to measure the operating performance: The above formulas contributed on calculating the ratios of the shipping companies for the time period of 2005 2009. Moreover, many independent variables were used to define the most accurate and specifically those that would give some results. Consequently as independent variables are defined the above: Out_Board = the proportion of the independent directors over the total directors. CEO = if the same person occupies the post of the chairman of the board and the Chief executive is defined by valuing with zero, otherwise value with one. Audcom1 = the proportion of the audit committee. In the end in order to run the regression, the economic models should be defined. For the return on equity: For the return on assets For the return on investment capital For the current ratio So as to measure the operating performance of the shipping companies the above economic model was used. Furthermore the above parameters should be defined. ÃŽÂ ²o:Constant term ÃŽÂ ²1:Coefficient of the regression ÃŽÂ ²2: Coefficient of the regression ÃŽÂ ²3: Coefficient of the regression eit: Disturbance term Empirical Results and Discussion It is important to mention some important data before continuing to comment on the outputs of the regression. First of all the regression outputs will be tested for all the three confidence intervals 90%,95% and 99%. In order to have a statistical significant output the t statistic has to be greater than 1.64, 1.96 and 2.576 respectively. Moreover so as to have a statistically significant variable the p value has to be less than 0,1 , 0.05 and 0.01 respectively. As it can be observed from the table below, the three independent variables are statistically insignificant because the t statistics are lower than the critical values. Moreover it can be confirmed because all the p values are greater than the level of significance. Dependent Variable: ROE Method: Panel Least Squares Total panel (unbalanced) observations: 99 Variable Coefficient Std. Error t-Statistic Prob. OUT_BOARD -0.00683 0.552604 -0.01236 0.9902 CEO 0.017437 0.17098 0.101982 0.919 AUDCOM1 -0.002796 0.101423 -0.027571 0.9781 C 0.18661 0.529641 0.352334 0.7254 R-squared 0.000114 Adjusted R-squared -0.031461 F-statistic 0.003613 Prob(F-statistic) 0.999698 S.E. of regression 0.791347 Dependent Variable: ROA Method: Panel Least Squares Total panel (unbalanced) observations: 99 Variable Coefficient Std. Error t-Statistic Prob. OUT_BOARD -0.095721 0.061678 -1.551956 0.124 CEO -0.032232 0.019084 -1.688972 0.0945 AUDCOM1 0.009389 0.01132 0.829387 0.409 C 0.140099 0.059115 2.369954 0.0198 R-squared 0.078318 Adjusted R-squared 0.049212 F-statistic 2.690791 Prob(F-statistic) 0.050602 S.E. of regression 0.088325 Dependent Variable: ROA Method: Panel Least Squares Total panel (unbalanced) observations: 99 Variable Coefficient Std. Error t-Statistic Prob. OUT_BOARD -0.104552 0.060653 -1.723773 0.088 CEO -0.028425 0.018493 -1.537033 0.1276 C 0.171387 0.045439 3.771807 0.0003 R-squared 0.071644 Adjusted R-squared 0.052303 F-statistic 3.704289 Prob(F-statistic) 0.028204 S.E. of regression 0.088181 It is evident from the tables above that there is a correlation between return on assets and the independent variables. On the first table it can be observed that the CEO independent variable is statistically significant on 10% confidence interval. Also R- Squared is 7.16% of the variability of the return on assets and is explained by the regression. On the second table one independent variable is excluded from the regression in order to prove that the proportion of the outside directors over the total number of the board is also statistically significant at the 90% confidence interval. It is evident that these two variables influence the financial performance of the shipping companies that are selected in the sample. On the table below it is shown the regression output between the return on investment capital and the independent variables. It can be observed that the proportion of the outside directors and the CEO are statistically significant on the 90% confidence interval. It implies that the majority of the sampled firms, in the period under study, have separate persons occupying the posts of chief executive and the board chair. Dependent Variable: ROIC Total panel (unbalanced) observations: 97 Method: Panel Least Squares Variable Coefficient Std. Error t-Statistic Prob. OUT_BOARD -0.108758 0.062348 -1.744367 0.0844 CEO -0.031869 0.019189 -1.660741 0.1001 AUDCOM1 0.00542 0.011377 0.476405 0.6349 C 0.199476 0.059341 3.361532 0.0011 R-squared 0.081182 Adjusted R-squared 0.051542 F-statistic 2.738981 Prob(F-statistic) 0.047783 S.E. of regression 0.088251 Dependent Variable: CURRENT_RATIO Method: Panel Least Squares Total panel (unbalanced) observations: 99 Variable Coefficient Std. Error t-Statistic OUT_BOARD 0.554821 1.498786 0.37018 CEO -0.636588 0.463736 -1.372737 AUDCOM1 0.538569 0.275082 1.95785 C 0.954122 1.436504 0.664197 R-squared 0.047648 Adjusted R-squared 0.017574 F-statistic 1.584356 Prob(F-statistic) 0.198271 S.E. of regression 2.146311 Another ratio so as to observe the financial performance of a company is the current ratio. By running a regression it can be concluded that the audit committee size is statistically significant at a 90% and 95% confidence interval. Because of the different financial performance ratio it can be observed a different correlation between the dependent and the independent variable. On the particular output the positive relationship between the liquidity ratio and the audit committee seems to be a very reasonable result. Shipping companies follow the corporate governance guidelines which are given by the NYSE for the audit committees. In the end a regression was run for the operating performance of the shipping companies. On the table below it is shown that the proportion of the outside directors is statistically significant at 90% confidence interval with t statistic greater than the critical values. Also it is shown that the audit committee variable is also statistically significant for all the confidence intervals. But the R squared of the output is very low which means that only the 8.76% of the variability of the dependent variable is explained. Dependent Variable: OPER_PERF Method: Panel Least Squares Total panel (unbalanced) observations: 99 Variable Coefficient Std. Error t-Statistic Prob. OUT_BOARD -0.951585 0.50254 -1.893552 0.0613 CEO 0.083654 0.15549 0.538005 0.5918 AUDCOM1 -0.23875 0.092234 -2.588514 0.0112 C 3.109729 0.481657 6.456321 0 R-squared 0.087671 Adjusted R-squared 0.05886 F-statistic 3.043024 Prob(F-statistic) 0.032629 S.E. of regression 0.719653 Descriptive statistics The table below presents the result of the descriptive statistics analysis between the dependent variables and the independent variables by measuring the mean, the standard deviation and the percentage of distribution range of the pooled years of the sample under study. Descriptive Statistics Oper_Perf Roa Roe Roic Cur_ratio Out_Board CEO AUDCOM1 Mean 1.741854 0.078202 0.18183 0.11603 3.243112 0.762211 0.474747 2.808081 Median 1.527139 0.072055 0.156449 0.110134 1.86132 0.777778 0 3 Maximum 5.409894 0.513177 3.84573 0.368966 70.57955 1 1 5 Minimum 0.889839 -0.42841 -4.60062 -0.41285 0.1406 0.428571 0 1 Std. Dev. 0.737746 0.090581 0.779185 0.09045 7.100746 0.153031 0.501903 0.816623 Skewness 1.867152 -0.45139 -1.94635 -1.54254 8.614659 -0.20659 0.101139 0.250996 Kurtosis 8.233289 16.32647 24.76835 14.17857 81.7566 2.085215 1.010229 3.44567 Jarque-Bera 177.3846 735.9403 2017.183 549.1192 27351.86 4.156112 16.50043 1.858795 Probabil. 0 0 0 0 0 0.125173 0.000261 0.394791 Sum 179.411 7.741993 18.00119 11.3709 327.5543 75.45889 47 278 Sum Sq. D. 55.51539 0.804091 59.49867 0.793579 5042.06 2.295021 24.68687 65.35354 Observ. 103 99 99 98 101 99 99 99 As it can be referred from the table above the number of the observations is all close to the hundred. This is because some of the data were not available and could not be extracted from the financial reports. Moreover another reason of the lack of some data is that some of the shipping companies were listed in the New York Stock Exchange after 2005. Conclusion The aim of this essay was to prove that there is a relationship between corporate governance mechanisms and firm performance using a sample of 21 shipping companies which are listed in the New York Stock Exchange from 2005 until 2009. The study used firm performance ratios and three mechanisms to prove the above relationship. Panel data methodology is employed; the method of analysis is multiple regressions and the method of estimation is Ordinary Least Squares. The study concludes to the followings: There is no significant relationship between ROE and none of the independent variables. There is a significant relationship among ROA and CEO status and the proportion of the outside directors. There is significant relationship among ROIC, board composition and CEO status. There is a significant relationship between Current ratio and audit committee. And there is a significant relationship among operating performance, board composition and audit committee. Concerning future research, efforts should be made to increase the sample size and the corporate governance variables to achieve a clearer view about the affection of the corporate governance mechanisms on the shipping companies. It can be said that shipping industry has been expanded all over the world from family to family. It is a closed industry which excludes many people. Consequently the nature of the industry makes it very difficult to perform an in depth research and establish an outcome. References Web Sites http://www.investopedia.com/ http://en.wikipedia.org http://www.dianashippinginc.com Home page

The Use of Steroids in Major League Sports :: Athletes Drugs Professional Baseball Doping

The Use of Steroids in Major League Sports There has been a lot of controversy about steroids in sports. The pressure has caused some sport stars to admit to their use of steroids. Some of these people are Barry Bonds, Gary Sheffield, and Jason Giambi. Steroids though seem very helpful to professional athletes, it can very dangerous and can help people get advantage over other people. Steroids have been around for a long time. â€Å"The first people to use anabolic steroids for athletic enhancement were the Russians who discovered the drug and had great success.† They stared to use the steroids in the 1950’s. The steroids they used had many side effects. When they started to use them, they had a high chance to die of heart disease and many other things. During the Olympics in 1950 and a little beyond the Russians were know as the best weight lifters in the world. No one knew that they used steroids. After a while, their secret was out and the Bulgarians started to use them. Steroids can help but they do have very severe side effects. â€Å"Overall the usage of steroids is very damaging to the human body.† In men, the steroids can cause shrinkage to the testicles, decrease sperm count, sterility, impotence, prostate enlargement, and growth of breasts. Most of the side effects cannot be reversed. The most severe side effect of steroids is on the liver. It is called Peliosis Hepatis, which is a blood-filled cyst in the liver. If the cysts rupture, they can cause liver failure. That would most likely kill the person. In women, it can sue the growth of facial hair, shrinkage of the uterus, sterility, deepening of the voice, decrease in breast size, and irregularity in the menstrual cycle. In both men and women, jaundice, edema of feet and ankles (water retention), headaches, aching joints, reduction in HDL, high blood pressure, stroke, hair loss, liver ailments, acne, atherosierosis and cancer. When injected some of the risks are developing hematons a nd getting AIDS and HIV. Taking steroids shortens the life span up to twenty years and a chance of getting diabetes, cardiovascular diseases, and hypertension. The side effects are reactions from using steroids are endless. There are many different kinds of steroids and the side effects are getting less severe but more people are taking them because of their immediate effect. â€Å"But, there are a host of new bodybuilding drugs such as GH, Insulin, IGF, PGF, TGF, DNP, beta agonists, etc.

Chlorine and Magnesium Lab Introduction Essay

Introduction The purpose of this lab experiment is to determine the atomic weight of magnesium by measuring the amount of hydrogen gas evolved when hydrochloric acid reacts with magnesium. The reaction is as followed: Mg + 2HCL ? H2 + Mg2+(aq) + 2Cl-(aq) In this experiment there is a one to one relationship between the number of moles of hydrogen gas evolved and the moles of magnesium metal consumed in the reaction. Therefore in the finding of the experiment moles of H2 evolved is equal to the moles of Mg consumed, and atomic weight of Mg is equal to the weight of Mg consumed per moles of H2 evolved. Procedure 1st. Obtain a 600ml beaker, add 300ml of water 2nd. add 30ml of HCl (2M) to the beaker and stir 3rd. add 10mg of Magnesium metal to the beaker 4th. Allow hydrogen gas to evolve, all of the magnesium should be consumed. 6th. Record the amount of hydrogen gas evolved using the chemical property dialog. Observations and Results Moles of hydrogen evolved: 0. 000829g (8. 29 x 10-4)/ 0. 000411 moles, (4. 1 x 10-4) Calculated atomic weight of magnesium: ______________ Atomic weight of Mg = weight of Magnesium/moles of H2 Moles of H2 evolved = moles of Mg consumed Atomic weight of Mg= /0. 000411moles During my observation I noticed that when 10mg of magnesium metal was added to the beaker a shaded area appeared on the bottom of the beaker. When the bubbles stopped and the shaded area in the beaker disappeared it showed that the magnesium has been consumed. Discussion Conclusion < Within a few sentences, provide a concluding statement about the results of your laboratory>

The Enron Scandal Essay - 619 Words

The Enron Scandal In a front-page article with no less than four by-lines (7/03, Enron Triggers a Slew of Proposed Fixes But What Will Stick? by Steve Liesman et al.), The Wall Street Journal reports, As more than 10 congressional committees pursue inquiries, 32 Enron-related bills have been introduced to address ills ranging from auditor conflicts of interest to the scams of an unregulated derivatives market. The Securities and Exchange Commission pledges to reform accounting rules, get tough on fraud and overhaul auditor oversight. General Electric Co. says it will issue a disclosure statement the size of a phone book, if thats what investors want. The trouble is that such a phone book, if it reflected the state economic†¦show more content†¦The level playing field catch-word distracts attention from the monstrous discrepancy between the accountancy practised by the government in its own books and what the large corporations get away with. The corporations hide their debts by keeping them o ff-balance-sheet. The government buries its investments. The level playing field is the Mother Lie that has birthed the swarm of distortions and untruths that are now crawling out from under every table and from every crack in the walls. It is gratifying that the media and some of our politicians are starting to recognize some of what ER had warned about for many years. But the most basic lie is still protected by the greatest of taboos. It goes on being drummed into freshmens heads in every country of the world. No Finance Minister can open his mouth without it jumping out at you. The mirage of a self-balancing economy made up of tiny actors that are all powerless individually to affect prices is the scientific version of the level playing field. That could hardly cover an economy dominated by the Microsofts, General Electric, and the Enrons. Surely you have to deal with that obvious clash between the fine theory and the reality to which it is being applied. You might as well sendShow MoreRelatedThe Enron Scandal854 Words   |  4 PagesThe Enron Scandal Background Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 20,000 staff and was one of the world s leading electricity, natural gas, communications, and pulp and paper companies, with claimed revenues of nearly $101 billion in 2000.[1] Fortune named Enron America s Most Innovative Company for six consecutive years. At the end of 2001, it was revealedRead MoreEnron And The Enron Scandal847 Words   |  4 PagesThe Enron scandal, discovered in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based mostly in Houston, Texas, and also the dissolution of Arthur Andersen, that was one amongst the 5 largest audit and accounting partnerships within the world. Additionally, to being the most important bankruptcy reorganization in American history at that point, Enron without doubt is the biggest audit failure. it s ever the foremo st notable company within theRead MoreEnron Scandal2929 Words   |  12 PagesLaw and Management Book Review Enron, Titanic and The Perfect Storm - Nancy B. Rapoport Student No: 0834172 Word Count: 1500 1 CILM Book Review 0834172 Two years after Enron filed for bankruptcy in 2001, Nancy b. Rapoport wrote this essay expressing her unique perspective on the real cause of Enron’s demise. This essay catches the reader’s attention instantly, because unlike abundant other articles written on the biggest corporate scandal in American history, the author here rejectsRead MoreEnron Scandal1844 Words   |  8 Pagesï » ¿THE ENRON SCANDAL FACTS OF THE CASE Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Enron s predecessor was the Northern Natural Gas Company, which was formed during 1932, in Omaha, Nebraska. It was reorganized during 1979 as the main subsidiary of a holding company, Inter-North which was a diversified energy and energy related products company. During 1985, it bought the smaller and less diversified Houston Natural Gas company. EmployedRead MoreEnron Scandal9449 Words   |  38 PagesThe Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the de facto dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron was attributed as the biggest audit failure.[1] Enron was formed in 1985 by Kenneth Lay after merging Houston NaturalRead MoreEnron Scandal Of Enron Corporation Essay1145 Words   |  5 PagesIntroduction Enron scandal which aroused in 2001 was one of the most famous events in the area of fraud audit. As the auditor company of Enron, Arthur Andersen failed to prepare true and fair auditing reports. They both suffered lethal loss at that time. The following paragraphs will discuss this fraud event, including the organization history, the organization’s event, the fraud issue in the event, the consequence of the main stakeholders, auditors in the event and their roles, and the current situationRead MoreThe Enron Scandal Of A Company1193 Words   |  5 Pageswell. What if this company falsifies their records and in a couple of days the company and its stock value go from $90 per share to just a penny per share. You lose your money just because a company cheated and stole your money. This is what the Enron scandal did to thousands of people. It could have been stopped if more forensic accountants in the world are checking on the companies. This way they don’t lie about their stock value. Forensic accountants are in charge of checking business financial recordsRead MoreEnron Accounting Scandal1096 Words   |  5 PagesEnron was originally a pipeline company in Houston, Texas in 1985. Enron became a company that was able to profit by providing deliveries of gas to utility companies and businesses. As the deregulation of electric power rose, Enron diversified the business and entered into an energy broker, which traded electricity and other types of commodities. Enron employed several highly qualified PHDs in mathematics, physics, and economics. Enron continued to enter into contracts with customers and utilizedRead MoreThe Enron Corporation Scandal 1791 Words   |  7 PagesIDENTIFY THE ACCOUNTING PRACTICES THAT WERE ASSOCIATED WITH THE ACCOUNTING SCANDAL. The Enron Corporation failures made world headlines for many reasons ranging from greed from its executives, the alleged malpractice and criminal behaviours, and its quick and disastrous collapse. The most critical factor in Enron’s melt down was the use of creative and manipulative accounting practices to distort reported proï ¬ tability and indebtedness that befell the corporation (A. Holt and T. Eccles, 2002) TheRead MoreThe Enron Scandal Of The United States1855 Words   |  8 PagesThe Enron Scandal is still viewed today as one of the largest corporate bankruptcies in history. The greed that spilled throughout the organization started with gradual disregard for basic accounting principles. Initiated by small discrepancies in the company financial system became extreme financial crimes that left many without jobs and many investors penniless. The Enron scandal led to legislation that tightened restrictions on accounting practices in the U.S. requiring more strict compli ance