Tristan Perry
AC 230 Financial Management
Agency Conflict Assignment
Due: 1/27/16
The Fall of Enron
With a fall of a giant energy plant, it shows how much really is affected by an agency
conflict. Due to an error in the accounting department the company officers and board of
directors were selling their stock at higher prices than it was worth. When it was finally
discovered thousands of stockholders lost millions of dollars causing the company to
plummet.
The company should have been checking the reports more frequently, so they would be
able to notice a jump in prices when nothing important happened financially to cause the
rise in prices. When they found about the scandal the company’s officers and board of
directors should have given some kind of compensation to the stockholders for their
inconvenience, and to keep them happy so they won’t sell out and ditch the company. In
conclusion, the company should have reviewed the accounting reports prior to making the
stockholders pay more for their stock.
Work Cited
http://smallbusiness.chron.com/examples-agency-problems-financial-markets-70962.html
The fall of Enron