Enron

AAA

DEFINITION of 'Enron'

A U.S. energy-trading and utilities company that housed one of the biggest accounting frauds in history. Enron's executives employed accounting practices that falsely inflated the company's revenues, which, at the height of the scandal, made the firm become the seventh largest corporation in the United States. Once the fraud came to light, the company quickly unraveled and filed for Chapter 11 bankruptcy on Dec. 2, 2001.

INVESTOPEDIA EXPLAINS 'Enron'

Enron shares traded as high as $85 before the fraud was discovered, but plummeted to $0.30 in the sell-off after the fraud was revealed. Shareholders received company payouts as compensation for their losses, but former company executives also settled to pay shareholders out of their own pockets. Enron was the first big-name account scandal, but it was soon followed by the uncovering of frauds at other companies such as WorldCom and Tyco International, and has become a symbol of modern corporate crime.

RELATED TERMS
  1. William Cavanaugh III

    Chairman of the World Association of Nuclear Operators (a nuclear ...
  2. Enroned

    A slang term for having been negatively affected by senior management's ...
  3. Business Ethics

    The study of proper business policies and practices regarding ...
  4. Securities Fraud

    A type of serious white-collar crime in which a person or company, ...
  5. Andersen Effect

    A reference to auditors performing more careful due diligence ...
  6. Badwill

    The negative effect felt by a company when shareholders and the ...
Related Articles
  1. Top 8 Ways Companies Cook The Books
    Personal Finance

    Top 8 Ways Companies Cook The Books

  2. The Biggest Stock Scams Of All Time
    Investing

    The Biggest Stock Scams Of All Time

  3. Solutions For Concentrated Positions
    Investing Basics

    Solutions For Concentrated Positions

  4. Playing The Sleuth In A Scandal Stock
    Investing Basics

    Playing The Sleuth In A Scandal Stock

comments powered by Disqus
Hot Definitions
  1. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  4. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  5. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center