Corporate Scandals: How Greed Consumed the American Dream
Enron is not even at the top of the list. More and more corporate scandals are happening in America. Why have these scandals just shown up in recent years? What causes these corporations to lie and be deceitful towards investors? Though once seen as legitimate, fair, honest, and respectable, corporations have arrived at a stage of greed and deception. This can be explained by a number of factors such as the how the stock market works, the stock market boom, the stock market flourishing, changing company practices, new CEO benefits, and specific company examples.
Public companies are any company that has stock available to the public to buy. A company that wishes to set up a new business or expand its existing business can raise the capital it requires either by borrowing money or by issuing shares to investors. The investors become shareholders in the company, meaning they are part owners of the company and share in its profits and growth. These stocks represent how well the company is doing. When the accounting books are tampered with to show the company is thriving when debt is actually accumulating is when investors lose all their shares because they fall all of a sudden and lose all worth; without any warning. Companies wishing to have their shares traded must first be listed. To become listed, a company must be large enough for there to be a market in its shares and it must agree to abide by the listing rules which, with other things, require it to keep the market informed of its activities and to regularly report profits and other financial information (Flint). Auditing firms have been overlooking figures and hiding debt from the public for their high paying compa ...