The Effects of Enron
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The purpose of this study is to examine the effects of Enron's collapse and the long-term implications of its failure. The areas affected by the company's demise are: society's perception of business, energy industry, large corporations, and regulation. One way the energy company was made apparently profitable was through a constant push for deregulation of the energy market. In 2000 Enron reported revenue of $100.8 billion, making them number seven on the Fortune 500 list of the largest companies in the country. It is now realized that Enron's accomplishments were due mostly to their misrepresentation of financial documents. This misrepresentation eventually caught up with them - Enron ended up filing the largest bankruptcy in history. Enron's fall has severely hurt investors' view of business. In large measure, Enron's collapse accelerated the public's lack of confidence in regulators and the stock market. In addition to this, the Enron disaster has left large companies with problems such as maintaining their 401(k) pension plans. Furthennore, the energy industry is now being more tightly regulated and found it especially difficult to obtain credit to fund expansion and new projects. In order to combat the effects of Enron, changes have been made to regulation. The most significant addition of law has been the Sarbanes-Oxley Act, which sets more restrictions for executives.