Corporate Governance: Enron and Parmalat Case Essay

Company Executives

Previously, I thought that the reasons companies became bankrupt was due to the poor decisions made by their CEOs. As a public sector employee, I also believed that the concept of corporate governance is applied to governmental and non-profit organizations. However, as I was taken through the lectures I gradually understood the meaning and definition of corporate governance. Successive lectures also revealed to me the effects of good decisions on governance issues. I understood that CEOs need to have a clear knowledge of the roles, duties, and responsibilities that go with corporate governance.

Corporate Governance

I understood that corporate governance constitutes those policies, laws, and legislation that define the relationship between company administrations and stakeholders, stockholders, and ways of achieving organizational goals. I realized that when company executives incorporate loyalist issues in running organizations, scenarios like the ones witnessed with Enron and Parmalat are likely to unfold. These issues expose the greed and weakness of company laws and the extent to which trust placed on these CEOs play havoc on these organizations. I was led to understand that the roles of corporate governance include fulfilling organizational goals and strategies while taking care of its operating environment. It became clear that good corporate governance ensures systems evolve to dynamically address changing stakeholder needs of a business environment by employing internal and external corporate governance mechanisms.

Company Secrecy

I think that sharing company secrets is the moral duty of its executives. Sharing of these secrets was the reason CEOs failed in their duty by sharing internal secrets that lead to the detrimental effect of the fall in share prices for blue stars (Civiletti 1).

Financial statements

In the lectures, I understood that company financial statements have to be genuine to reflect its financial position and performance. I found that corporate greed and lack of corporate values and norms made Enron’s executives present fake financial statements while they transferred company money to individual accounts and presented false future hypothetical values, facts which contributed to the collapse of the giant company. I realized that there were no policies in place by both companies to control their behavior. I visualized these behaviors on the model of human behavior such as the economic model, sociological model, psychological model, and the political model.

The lectures made me understand that these behavioral models define the roles of legislative bodies, policymakers, shareholders, stakeholders, management, the board of governors, and the community at large for the economic prosperity of a company and its stakeholders. I realized that there were similarities and differences between Enron and Parmalat case studies.

Minutes for the group meeting

Finally, we formed a group whose role was to compare and contrast Parmalat and Enron case studies for our first assignment. The group members passed the following minutes.

1. Each member shall take the roles assigned and fully contribute to the assigned topic.
2. Members shall take active roles and those perceived not to have participated shall face disciplinary action by going it alone.
3. A meeting shall be convened to assess the progress report of each member.
4. Group members’ findings shall be discussed on the last day to evaluate each group’s contributions.

I am planning to read more on corporate governance to acquire better skills and get clear answers to the questions on the case studies. I am planning to answer the question of the collapse of Enron.

Reference/List

Civiletti, Benjamin R. Confidence and Courage in Corporate Governance: Moving beyond the new letter of the law. [Online]. Web.