![]() These payments had predictable future cash flows which were treated as “merchant assets”. These aggressive accounting practices opened the ways of market-to-market accounting known as Volumetric Production Payments. ![]() The drive to maintain reported earnings, growth and therefore higher shares price led to aggressive accounting practices. By doing this, the company was able to get away with not revealing the impending bankruptcy coming to Enron and allowing others to invest to try and cut down on the debt. To cover up the large losses financially, the financial statements were altered and even the accounting firm was used to cover up a lot of the losses. Enron had a quick decline to bankruptcy and there were many people in the company involved in this bankruptcy that chose not to voice their concerns for many different reasons for a long period of time.Įssentially Enron’s downfall occurred because the top executives were taking big risks which were not paying out. Moral muteness refers to the failure to forthright one’s moral concerns regarding issues about which one possesses moral convictions. The theory of moral muteness played a large role in the collapse of Enron. Enron, once a dormant natural gas pipeline company grew to become the seventh largest publicly-held company in the United States, collapsed in December 2001 because of its “Ponzi” schemes and shoddy business practices.
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