Business Ethics Case Studies

Case Study: Reasons behind the Bankruptcy of Lehman Brothers

The bankruptcy of Lehman Brothers was a result of the investment bank’s exposure to the 2007-2010 financial crisis. In fact, the demise of the investment bank would come to symbolize the crisis. Therefore, in order to understand the bankruptcy of Lehman Brothers, a consummate understanding of the 2007-2010 financial crisis is requisite. As such, an examination of crisis will serve as introductory.

Several factors contributed to the fall of Lehman Brothers. Perhaps most important, however, was the period of deregulation that preceded the crisis.

Arguably, the period of deregulation started during the Reagan Era. Reaganomics, the lassiez faire economic policies advocated by the former president, may have served as the starting point for the deregulatory climate that ensued for the following two decades.… Read the rest

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Case Study: The Collapse of Enron

Enron Corporation is an energy trading, natural gas, and electric utilities company located in Houston, Texas that had around 21,000 employees by mid-2001, before it went bankrupt. Its revenue in the year 2000 was more than $100 billion and named as “America’s most innovative companies for six consecutive years by Fortune. Enron was a company that was able to profit by providing the delivery of gas to utility companies and businesses at the fair value market price. Enron was listed as the seventh largest company in the United States and had the domination in the trading of communications, power, and weather securities.… Read the rest

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Case Study: The Enron Accounting Scandal

As 2002 began, energy trader Enron Corp. found itself at the center of one of corporate America’s biggest scandals. In less than a year, Enron had gone from being considered one of the most innovative companies of the late 20th century to being deemed a byword for corruption and mismanagement.

Enron was formed in July 1985 when Texas-based Houston Natural Gas merged with InterNorth, a Nebraska-based natural gas company. In its first few years, the new company was simply a natural gas provider, but by 1989 it had begun trading natural gas commodities, and in 1994 it began trading electricity.

The company introduced a number of revolutionary changes to energy trading, abetted by the changing nature of the energy markets, which were being deregulated in the 1990s and thus opening the door for new power traders and suppliers.… Read the rest

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Case Study on Corporate Governance: Satyam Scam

Satyam Computers services limited was a consulting and an Information Technology (IT) services company founded by Mr. Ramalingam Raju in 1988. It was India’s fourth largest company in India’s IT industry, offering a variety of IT services to many types of businesses. Its’ networks spanned from 46 countries, across 6 continents and employing over 20,000 IT professionals. On 7th January 2009, Satyam scandal was publicly announced & Mr. Ramalingam confessed and notified SEBI of having falsified the account.

Raju confessed that Satyam’s balance sheet of 30 September 2008 contained:

  • Inflated figures for cash and bank balances of Rs 5,040 crores (US$ 1.04 billion) [as against Rs 5,361 crores (US$ 1.1 billion) reflected in the books].
… Read the rest
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Case Study on Corporate Governance: WorldCom Scandal

Established in 1988, WorldCom was formed so that the strongest, most capable public relations firms could serve national and international clients, while retaining flexibility and client- service focus inherent in independent agencies. Through WorldCom, clients have on demand access to in-depth communication expertise from professionals who understand the language, culture and customs in the geographic areas of operation. WorldCom has 105 offices in 90 cities and 40 countries on five continents, more than 2000 employees and recorded revenue of US $ 243.5 million in 2008.

In the 90’s WorldCom was involved in acquisitions and purchased over 60 firms. The complete financial integration of the acquired company must be accomplished, including an accounting of assets, debts, and a host of other financially important factors.… Read the rest

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Case Study on Corporate Governance: Enron Scam

Enron is an energy-based company in Houston, Texas that deals with the energy trade on international and domestic based. Enron Corp. Is one of the world’s largest energy, commodities and Services Company was created out of merger of two major gas pipe line in 1985.

Enron was created by merge between Houston Natural Gas and Internorth. Houston’s gas’s CEO Kenneth lay headed the merger of the two companies. After that Kenneth lay become the CEO of Enron. Earlier Enron was Enron was solely involved with the distribution and transmission of electricity and gas of United States.

In merger, Enron incurred a large amount of debt, and which resulted deregulation, after this Enron was no longer had the rights of its pipelines.… Read the rest

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