The smartest guy in the room - the enron documentary Essay

The smartest guy in the room - the enron documentary - Essay Example Precisely, the company’s top management inflated the stock prices and amassed overwhelming capital investments from the shareholders while the company was running into bankruptcy. After the company collapsed, Enron’s shareholders were subjected to reduced per capita income, which further influenced a reduction in the country’s GDP (Gross Domestic Product). In order to prevent the occurrence of inflated stock prices that in turn influenced shareholders to invest in fraudulent companies, the government should issue strict regulations. The importance of this approach is to ensure that the business environment is informed about every company’s financial prospectus, statement of profits and losses, and its overall performances in the market (322). Eventually, every company will only present actual information to the market and the shareholders’ responses will in turn affect increase or decrease in the stocks’ prices. Considering such a regulation is vital towards financial development and contentedness of the investors (325). This will serve for the benefit of the country’s economic environment since corruption and fraudulent company practices will be diminished. Enron’s top management is depicted in the movie as a group driven by the greed to earn and resuscitate the company to a profitable position. Therefore, the company’s accounting department embarks on the use of the â€Å"mark-to-market† accounting tactic that aims at deceiving the investors’ population to acknowledge its performance through the highlighted bogus profits (Moeller 34). This accounting tactic enabled the company to forecast on its probable profits in a ten-year period and establish them on their current profit statement as though the Enron had made them. The tactic is fraudulent and should not be used in business organizations. Enron’s CEO Mr. Jeffrey Skilling and Kenneth Lay are depicted in