Quiz #5

Ethics at Enron

Footer: Type your name and ZID# into the footer.

Assignment: Ethics at Enron.

Requirement: Answer Questions 1 – 11 below.

Estimated Time To Complete the Assignment: 1hr. 50 min for movie time and 60 minutes for questions

Enron: The Smartest Guys in the Room:

Watch the movie Enron: The Smartest Guys in the Room (Magnolia Home Entertainment, 2005, Los Angeles, California). 1 hr. 50 min. $2.99 at You Tube, Vudu, Amazon Video, or Google Pay Movies & TV. It is also available on Netflix.

Here are some additional sites that may give free access to the above documentary (some may have subtitles though):

Each question below is worth 3 pts. Total regular points are 22 plus 11 pts. extra credit possible, depending on how thorough your answer is. If you answer just “Yes” or “No” or in simple short phrases, you will not receive full credit. All answers are to be typed into this word document. Use complete sentences and treat each question as a short essay. Explain your answers. Your completed assignment should be about 3 1/2 – 4 pages in length.

Answer the following questions below:

1. Do you think such behavior is common at other companies or do you think this was a fairly isolated event? Why?

2. How important is the “tone at the top” (the tone set by company leadership? Why?

3. Do you think you could be tempted to follow along if the leadership at your company had the same mentality as the leadership at Enron, or do you think you would have the courage to “just say no” or even be a whistle-blower”?

4. Why do you think some people can so easily justify (at least to themselves) their unethical behavior?

5. In general, do you think people stop to think about how their actions will affect other people, (e.g., the elderly in California who suffered due to electricity blackouts) or do they just “do their job”?

6. What was your reaction to the psychology experiment shown in the DVD? Studies have shown that unlike the traders at Enron (who received large bonuses), most employees really have very little to gain from following a superior’s directive to act unethically. Why then do some people do it?

7. Do you think people weigh the potential costs of acting unethically with the potential benefits?

8. The reporter from Fortune magazine asked the question, “How does Enron make its money?” Why should every employee and manager (at every company) know the answer to this question?

9. In light of the “market-to-market” accounting that enabled Enron to basically record any profit it wished to record, can you understand why some of the cornerstones of financial accounting are “conservatism” and “recording transactions at historical cost”?

10. How did employees of Enron (and employees of the utilities company in Oregon) end up losing billions in retirement funds?

11. You are a business student and will someday work for a company or own a business. How did watching this movie impact the way you intend to conduct yourself as an employee or owner?

Name & ZID#

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