Wealth

Two major events occurred in mid-January. One was China's successful bid for the Olympic Games and the right to host the 2008 Summer Olympics. The other is that the Enron company in the United States broke out fraudulent ugliness.

Enron is an American energy tycoon with a natural gas transmission network across the United States and Canada. The company's headquarters are located in Houston, Texas, the home of the Bush family.

Enron has always been shrouded in layers of golden halo. As the world's largest energy trader, the company's operating business covers forty worldwide. Countries and regions have more than 20,000 employees and assets of up to 62 billion U.S. dollars. The company controls 20% of the electricity and natural gas transactions in the United States, and its businesses include energy wholesale and retail, broadband, energy transportation, and finance.

Last year, Fortune magazine ranked seventh in the top 500 in the United States, and was named the most innovative company in the United States by the magazine for six consecutive years. Enron stock is a high-quality stock strongly recommended by all securities rating agencies. The stock price is as high as more than 70 US dollars, and it is still on the rise. Even more peaceful.

However, the financial report released by Enron in the second quarter attracted widespread attention from investors, media and management.

Because Enron, which has grown in earnings for 21 consecutive months, suddenly announced a loss of $600 million in the second quarter. It was this report that opened the prelude to the Enron incident.

Under strong pressure from government regulators, the media, and the market, Enron submitted documents to the US Securities Regulatory Commission acknowledging the existence of financial fraud. From 1997 to this year, a total of over 500 million US dollars of false profit was reported, and huge debts were not accounted for.

After the exposure of Enron's financial fraud incident, it was severely criticized by the media. Its stock was sold by investors. Its stock price fell all the way, and its market value fell from more than 80 billion US dollars at its peak to less than 200 million US dollars.

The exposure of Enron’s fraud incident caused great shock to the U.S. government and the opposition. The case involved a large number of government officials and members of Congress. It would also cost teachers, firefighters, and some government employees’ retirement funds more than one billion dollars. What is even more frightening is that the Enron incident has fundamentally shaken the beliefs of American investors.

Has the Wall Street stock market ever fallen? Constantly creating new stock market lows, investors’ assets in the U.S. stock market have shrunk by US$250 billion, equivalent to a quarter of the U.S. recession that year.

The decline in the US stock market has also affected global stock markets. Major European stock markets, Tokyo, Hong Kong, Singapore, Australia and other stock markets have also fallen sharply. The dollar has continued to depreciate, the bond market has also been turbulent, and the price of gold has risen all the way.

The Enron incident also caused a chain reaction of a series of corporate failures. Large companies such as Xerox also reported financial violations. At the same time, American companies have also caused a series of bankruptcy storms. The second largest retailer in the United States, Kmart, Global Communications, and the sixth largest cable company in the United States have successively declared bankruptcy protection. The second largest long-distance telephone company in the United States, World Communications Corporation, is more secure with $107 billion in assets, creating the latest bankruptcy record in the United States.

This series of bankruptcies has further hit the US financial market. This is the case. Business**, which is regarded as a classic teaching case by all business school courses, collapsed in just three months. So what factors caused Enron to collapse. To the closed one? Why did the Enron incident produce such a big shock in American society?

The Enron incident is actually a huge business scandal involving American politics and economy, high-level government and high-level corporate officials. The main problem is the company's financial fraud.

There are several ways of financial fraud in public search. The most common one is to conceal debts through affiliated companies and branches. In the United States, you only need to own only 50% of the shares of a company, even if you are the actual controlling shareholder. You don’t need to record the company’s debts under your own company’s name. Since the mid-1990s, Enron has established a complex company system through capital restructuring, with more than 3,000 subsidiaries and partnerships. , Forming a typical pyramid-like affiliated enterprise group.

Enron is forcing these affiliated companies at the bottom of the pyramid to borrow debts for top-level capital reserves. These liabilities are not reflected in the financial statements of the parent company, but their profits can be reflected in the financial statements of the parent company. This allows the company to keep increasing returns on the books.

Moreover, because American laws stipulate that enterprises with different organizational forms shall bear different taxes, general sole proprietorships, partnerships, and limited liability companies only pay individual property and income tax by their shareholders, and do not have to pay corporate income tax. Enron used this to change the holding company into a limited liability company, avoiding high taxes.

In addition, Enron also uses self-trading to cheat, using the income from the sale of assets as business income, fictitious profits, and the sale of assets is mostly carried out in affiliated companies, and the price is significantly higher than the normal market price. 1. "In the twelfth quarter, only one of Enron's affiliated companies bought a factory from Enron for $200 million." nbsp;nbsp;The affiliated company bought a factory. This transaction caused a lot of controversy on Wall Street and the investment community. No one asked for it years ago, and it was sold to another company at such a high price, but it was this transaction that caused Enron's profit per share to increase sharply, causing a significant increase in market tracking.

In order to increase the investment volume of shareholders, Enron continues to create concepts to make investors believe that the company has entered a high-growth and high-profit field, and it will record the future income that may be brought to the company in the current period. However, the uncertainty was not disclosed, which seriously misled investors.

When things have reached this point, some people may ask, what exactly are the US government's regulatory agencies doing? Why can't the problem be detected in time?

In fact, the United States is one of the countries with the most advanced market economy in the world. The essence of the market economy is a contract economy and a credit economy, and a market economy based on this kind of credit.

Major US companies generally rely on accounting firms, other credit rating agencies, and investment banks to conduct assessment and audit. The government is very comfortable with this market supervision system, so it rarely intervenes.

When the Enron fraud scandal was born, people first guessed whether Andersen, the well-known accounting firm responsible for the audit of Enron, had any ulterior affair with Enron.

In fact, it was Arthur Andersen's illegal operations that helped Enron falsely report profits, conceal huge debts, and mislead investors to invest.

In fact, since the 1980s, Arthur Andersen was in charge of Enron's audit work while also accounting and consulting services. Last year, Arthur Andersen received 52 million dollars in revenue from Enron. Consulting services revenue is as high as 27 million US dollars. It can be seen that Arthur Andersen and Enron have a long-standing relationship of material interests.

For fear of offending these big customers, Arthur Andersen turned a blind eye to Enron's fraud, and taking into account the huge amount of consulting income, it was naturally an open side in terms of financial auditing.

The collapse of Enron is not just a company's downfall, it is the disintegration of a system, this. The system is not due to backwardness or incompleteness, but due to ***.

In fact, some people have long expressed doubts about Enron's profit model. Point out that although Enron's business looks brilliant. But in fact, no money is made. But because Enron has close contacts with the U.S. government, the prosecutors dare not act rashly.

Until May of this year. Finally, an insider discovered Enron’s huge financial problems. This "person is Enron’s vice president Sharon Watkins. He wrote a seven-page memo to Enron’s former Kenneth. Statement of the company’s crisis. But this This memo did not get Kenneth’s attention, because the concave himself was involved in the company's deceptive operations.

When the Enron incident ended, the federal administrative, legislative, and judicial agencies of the United States immediately launched emergency procedures to deal with the crisis, and made necessary supplements and supplements to the original laws around the issue of how to effectively ensure the authenticity and fairness of the financial reports of listed companies. Revise.

Although Enron's arrival in Taiwan affects the U.S. market, it also has a certain impact on domestic companies. Some domestic companies previously planned to go public in the U.S. At this time, due to the implementation of internal controls in the implementation of financial reporting Problems such as high costs, UU Read www.uukanshu.com, quite a number of domestic companies that are willing to raise funds in the U.S. have delayed listing in the U.S. or eventually chose capital markets in other regions for financing. For example, Air China’s shares are due to the stringent regulations in the bill. It was decided to change the location of Shangfu from Hong Kong and the United States to Hong Kong and the United Kingdom, and the Bank of China and China Construction Bank, which originally planned to list in New York, eventually abandoned the US market.

Regarding the Enron incident, Fan Wubing also talked about this problem in the company’s high-level video conference. He clearly pointed out that due to the Enron incident, the world economy has entered a brand new period of development. The downfall of our huge enterprise, followed by countless new companies stood up.

"In this new era, we should think about what kind of model the company should use to develop so that it will not repeat the same mistakes?" Fan Wubing put forward his requirements for many executives at the meeting.

But obviously. Due to the collapse of Enron, the contents of many economic textbooks have become unsuitable for this era. Although many executives have been trained very professionally, they are also at a loss at this time.

However, as the senior executives of Fan Investment Group, they are still lucky, because the company's profits continue to grow at a high level of people. At least Enron's business is far away from themselves.