First of all it can be mentioned that illegal or fraud activity conducted Lay and Skilling are

cause to the eventual collapse of Enron. All the fraud activities conducted by Lay and Skilling
and bad corporate culture led to the Eventual collapse of Enron. Both were aware of the Enron
Code of Ethics but however they did not follow it.

According to the article, there are main two reasons for the Enron’s collapse:
 Unethical and illegal behavior of the top management.
 A corporate culture that supported unethical behavior.

The inevitable collapse of Enron under Lay and Skilling was due to actions of top management
and corporate administration problems that led to a bad corporate culture within the
organization. It was not the doing of one individual however a gathering of them and an
ineffective framework. The activities done by Lay and Skilling is hard to demonstrate that they
were damaging laws, however it is both of them that made the corporate culture that portraits
their convictions and in Still them into the corporation.
The activities of top management (Lay and Skilling) not adhered to the values of the company
and totally undermine the foundational values of Enron Code of Ethics. The problem does not
lie within the Code of Ethics of Enron. Even though the code of ethics of Enron is well
structured and strong, the problem was top management not adhered to the company’s ethical
culture and top management attempted to follow an unethical culture as well as that culture
benefited to the company in illegal ways. They believed unethical road as a best option. The
top management was constantly pushing its employees to meet the sales target regardless of
ethical behavior.
The top management also attempted to show unreal assets which were haven’t there for real. It
was done just to increase investments towards the company. The top management also reported
accounts unethically and their intention was just to obtain investment from external parties
towards the company. This aggressive earnings management style forces employee to try to
achieve targets regards of any moral and ethical value. Lay and Skilling has made Enron
Corporation’s culture where it influenced employee into believing that what they were doing
was legal although it was immoral and quite unacceptable in normal circumstances. Employees
used to follow top management commands without knowing or knowing that it is illegal in the
environment. However Enron and Skilling made employees to believe their ideas and offered
rewards to the employees. Then finally it can be concluded that the illegal or fraud activity
conducted Lay and Skilling are lead to the eventual collapse of Enron.
Enron was a massive failure, partly because of its size, complexity, controls to protect the
integrity of capital market failed, and especially because of the massive greed and collusion of
key participants. Management failed , Auditor failed, Analyst failed, Creditors/Bankers failed,
and also regulators failed. The multiple failure sent a signal of management structure. Enron
Top management mishandled their privileges and power, manipulated information put their
own interests above those of their employees and the public and failed to exercise proper
oversight or shoulder responsibility for ethical failings which eventually led to the bankruptcy
of an American energy company based in Houston, Texas, and the dissolution of Arthur
Andersen, which was one of the five largest audit and accountancy partnerships in the world.