The Importance of Good Governance; Don’t Forget the Enron Scandal

In every company, it cannot be avoided to experience different issues, internet problems, financial challenges and many other complications. These things are very normal to happen especially if you have recently established your business, or whether new leaders, managers and employees have been hired. Although some challenges cannot be avoided, it doesn’t mean that you cannot do anything to fix it and do the right things.

This is why it is very essential for business professionals to understand the importance of good governance; don’t forget the Enron scandal since there are numerous things that people can learn from it. No company or organization is perfect – you will always see different flaws or mistakes within the organization, but these are perfectly fine. If these mistakes have been corrected and the same mistake happened again, then probably this is the time where something is wrong with how the establishment is being run.

This is why the importance of good governance is generally being emphasized before and even during the entire process of managing a business. This is about how the public affairs, employees and even other parties are involved, and that the realization of their human rights should be guaranteed.

In the beginning of this article, it has been mentioned that it is essentially needed for corporations to understand the importance of good governance; don’t forget the Enron scandal. Now that we know what good governance is, what is the Enron scandal? How has it affected the industry and what are the different things that business owners can learn from it? The Enron scandal was actually revealed last October of 2001. The Enron Corporation is an American energy company, which is situated in the city of Houston.

The said company was founded in 1985, but after so many years, exactly last 2001, the scandal was revealed which later on led to the company’s bankruptcy. As a matter of fact, stockholders of the said company have lost almost 11 billion dollars during this time. The prices of the stocks of Enron Corporation reached $90 per share, but went down to less than a buck before the year 2011 closes.

The Enron Scandal lacked good governance, which simply showed that without it, the foundations of the company can fall as fast as that, regardless of how established or long they have been in the industry. If you are an investor and even a business owner, it is best that you take your chance to learn and understand more about the importance of good governance; don’t forget the Enron scandal. Corruption is one of the biggest factors causing bankruptcy, and a simple way of determining whether a company lacks good governance or not.

As early as today, you have to account everything and make sure that the money being dispatched within the company goes to the right hands – or else, you might just end up losing everything just like the Enron Corporation. Good governance is about being transparent with your employees, with effective and efficient rules within the company, along with the fact that you are also following the Rule of Law.


15 September 2012