The Impact of Public Scandal

When large corporations participate in any kind of business activity, it serves as a window into the ethical standards of that corporation. With this in mind, it is no wonder that stakeholders in faltering companies such as Enron and Arthur Anderson see the recent scandals associated with theses corporations as a reason not only to be concerned, but as a reason to lose faith in their investment. But is Faith based solely on public perception? Although the novelty of these scandals has faded away, the impact is all to clear.

Any person who has a vested interest in on of these companies, weather it be a shareholder, creditor, or employee, should be very concerned by the lack of social responsibility that these companies are showing. The social responsibility of corporations basically encompasses "all the aspects of doing business beyond worrying about the next quarterly profit" (Bennett). Unfortunately, for all those who had a stake in Enron, the quarterly profit is exactly what the top level executives were worried about preserving. Their creative processes were focused on new accounting methods, rather that strategically placing the company for growth. Although they may have thought that they were keeping Enron alive by participating in these unethical activities, they were just instituting a short-term solution.

The effect of this should be that these individuals will be punished for what they have done. In an ideal world, that would be the case. However, that is not so, and the reality is that while the executives responsible may loose their jobs or be fined, the stakeholders in Enron have lost mush more. Employees have lost their income and retirement plans, creditors and shareholders have lost their investments, and the public has lost its trust in corporate America.

Unfortunately, "[r]eassuring investors about the integrity of the corporate governance and disclosure process alone is not enough" (The NYSE releases its recommendations). Investors, and the public in general, are going to expect not only reassurance, but "meaningful reform . . . and change" if their faith is going to be restored in corporate America (The NYSE releases its recommendations).

The scandal at Enron has had lasting effects on both Houston and the nation. Investments, jobs, and careers have all been destroyed in the name of corporate greed. Even Houston Astros fans will be forever reminded of the scandal every time they go to their favorite ballpark and see the sign above the door that reminds them that what was once Enron Field is now Minute Maid Park.

Bennett, Katherine and Avie Bennett. "People Have Lost Faith." Maclean's 115.34 (2 September 2002): 42. "The NYSE releases its recommendations to help restore investor confidence." Corporate Board 23.136 (September/October 2002): 26.