Discussion Questions and Answers
1. Who were the key stakeholders involved in, or affected by, the collapse of Enron? How and to what degree were they hurt or helped by the actions of Enron management?
Stakeholders are those people and groups that affect, or are affected by, an organization’s decisions, policies, and operations. Many stakeholders, both market and nonmarket, were affected by the collapse of Enron.
Stockholders initially reaped tremendous gains from their investments in Enron stock, as the company’s price rose much faster than market averages during the late 1990s. In 2001, as the stock price collapsed, investors lost $70 billion in market value. Both individual and institutional shareholders were hurt. Particularly devastated were Enron employees whose 401(k) retirement plans were heavily invested in their company’s stock. Even shareholders who did not own any Enron stock were hurt, as stock prices fell across the board in the wake of the scandal as investors doubted the integrity of many companies’ financial reports.
Discussion Questions and Answers1. Who were the key stakeholders involved in, or affected by, the collapse of Enron? How and to what degree were they hurt or helped by the actions of Enron management? Stakeholders are those people and groups that affect, or are affected by, an organization’s decisions, policies, and operations. Many stakeholders, both market and nonmarket, were affected by the collapse of Enron. Stockholders initially reaped tremendous gains from their investments in Enron stock, as the company’s price rose much faster than market averages during the late 1990s. In 2001, as the stock price collapsed, investors lost $70 billion in market value. Both individual and institutional shareholders were hurt. Particularly devastated were Enron employees whose 401(k) retirement plans were heavily invested in their company’s stock. Even shareholders who did not own any Enron stock were hurt, as stock prices fell across the board in the wake of the scandal as investors doubted the integrity of many companies’ financial reports.
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