Ethical Implications of Full Disclosure Principle on the fall of Enron Corporation

Abstract

For companies to remain competitive and in business, they ensure that stakeholders' interests are pursued and protected. Among such interests is increase in profits, market share and rise in share price. It is believed that companies that adequately provide information related to stakeholder-interest build their trust and are perceived to be ethical which leads to high performance. Hence, this study sought to theoretically assess the ethical implications of Enron's failure to comply with the Full Disclosure Principle in the Accounting Profession. Different ethical theories were employed to analyze the actions of the executives of Enron Corporation. It was discovered that teleological ethics, situationism, and conflicting absolutism supported the actions of these executives whiles deontological ethics, generalism, unqualified absolutism and graded absolutism found the actions of the executives as having no ethical justification. Nonetheless, antinomianism was indifferent in describing the actions as ethical or not. The study concludes that these managers were acting based on their own interests rather than their duties to employees and other stakeholders which led to the pursuit of huge compensation and other benefits. Companies should create a business environment that up holds transparent and full disclosure to enjoy all its associated benefits in both short and long term to ensure firms' continuous survival as it was the cause of Enron Corporation's fall.