| Course | ETM-7500 Ethics for Managers |
|---|---|
| Module | Module 2 |
| Paper type | Written assignment 2: morality, ethics and law |
| Length | About 625 words, 5 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | Master of Business Administration |
| Updated | October 2026 |
Free sample paper for ETM 7500 Module 2
Rank, Yank and Legislate: Enron's Culture and the Limits of Sarbanes-Oxley
Student Name
Master of Business Administration, Thomas Edison State University
ETM-7500: Ethics for Managers
Mentor Name
Month Day, Year
Rank, Yank and Legislate: Enron's Culture and the Limits of Sarbanes-Oxley
A Culture That Made Rule-Bending Rational
The performance review committee
The film describes Enron's twice-yearly reviews, in which employees were ranked against each other and the bottom 15 percent or so were pushed out, a practice employees called "rank and yank." McLean and Elkind (2003), whose book the film is based on, show how the system rewarded people who produced reported deal profits and punished those who questioned them. When a person's job depends on beating colleagues each six months, raising an objection to a profitable but dubious deal is dangerous. McLean and Elkind (2003) document how Enron's mark-to-market accounting and its trading culture rewarded reported gains over real ones.
Pay tied to booked value
Traders and deal makers were paid bonuses based on the estimated lifetime value of deals when they were signed, under mark-to-market accounting, not on cash the deals later produced. A deal that would lose money over years could still pay a large bonus in its first quarter. The incentive was to sign deals and book value, not to make deals that worked.
Leaders who celebrated aggression
The film's portraits of senior executives show a culture that prized intelligence and daring and treated caution as weakness. When leaders mock doubters and lavish rewards on rule-pushers, employees learn what the organization really values, whatever its code of ethics says. Enron had a code of ethics; its board waived that code to let the chief financial officer run partnerships that traded with the company.
The Legal Response: Sarbanes-Oxley
Congress passed the Sarbanes-Oxley Act in 2002 after Enron and WorldCom. Coates (2007) summarizes its main aims: improving the reliability of financial reports, strengthening auditor independence and increasing the accountability of executives and boards.
| Provision | What it requires | Enron cause it addresses |
|---|---|---|
| Section 302 | Chief executive and financial officers certify each report | Leaders who claimed not to know |
| Section 404 | Management assesses, and auditors test, internal control over financial reporting | Weak controls over complex deals |
| Auditor independence rules and the PCAOB | Limits on consulting for audit clients; a new regulator of audit firms | Andersen's conflicted relationship |
| Section 806 | Protection for employees who report fraud | Fear of speaking up |
| Section 906 | Criminal penalties for knowingly false certifications | Low personal cost of misconduct |
Can Law Create Ethics?
Sarbanes-Oxley addresses several of Enron's causes. Certification makes it harder for leaders to claim ignorance, independence rules remove some conflicts that compromised Andersen, and whistleblower protection lowers one cost of speaking up. Coates (2007) argues that, despite high early compliance costs, the act likely improved the quality of financial reporting.
But the law does not reach the mechanisms that made Enron's culture corrosive. No statute prohibits forced ranking, bonuses on booked value or leaders who reward aggression. Byars and Stanberry (2018) distinguish law, the minimum society enforces, from ethics, the standard an organization chooses to meet. Culture lives in the space between them. A company can comply with every Sarbanes-Oxley requirement and still pay people to bend the truth, so long as they do it within the rules.
Lessons for Managers
Three lessons follow. First, review and pay systems are ethical systems: they teach employees what the organization values more powerfully than any code. Second, a code binds only if leaders apply it to themselves; Enron's board waived it for its CFO, and everyone noticed. Third, legal compliance should be treated as the floor of a manager's obligations, not the definition of them.
Conclusion
Enron's collapse came from a culture that made misconduct rational, not only from accounting tricks. Sarbanes-Oxley raised the cost of the most visible failures and has likely improved reporting, but culture remains a manager's responsibility, set through what the organization measures, pays for and tolerates.
References
Byars, S. M., & Stanberry, K. (2018). Business ethics. OpenStax.
Coates, J. C. (2007). The goals and promise of the Sarbanes-Oxley Act. Journal of Economic Perspectives, 21(1), 91-116. https://doi.org/10.1257/jep.21.1.91
McLean, B., & Elkind, P. (2003). The smartest guys in the room: The amazing rise and scandalous fall of Enron. Portfolio.
Reading the ETM 7500 Module 2 assignment instructions
ETM-7500's second written assignment belongs to Module 2, Morality, Ethics, and Law, and draws on a required documentary about Enron's collapse. Module objectives cover ethical reasoning in organizational conduct, ethical theories and solutions to corporate dilemmas. Expect to analyze the film's events, relate them to the difference between law and ethics and evaluate legal or organizational responses. This is the second of five papers. This sample focuses on culture and the Sarbanes-Oxley Act. Expect to analyze how a company's culture led to misconduct and how the law changed in response.
Inside the ETM 7500 Module 2 example
The paper groups Enron's culture into three mechanisms, the review system, pay and leadership, each under its own subheading with evidence from the film and the book it is based on. A table maps five Sarbanes-Oxley provisions to the Enron causes they address. The next section weighs what the law reaches against what it cannot, drawing on how the textbook separates legal duty from ethical duty and on Coates's review of the act. Three lessons for managers and a short conclusion close the paper. The paper links specific cultural features to specific failures and then to the reforms that followed. The conclusion states one lesson for managers today.
Where the marks sit in the ETM 7500 Module 2 rubric
At MBA level, the Enron paper is graded on systems and incentives, not villains. Mentors look for accurate use of the film and sources, analysis of causes rather than a summary of events, a clear treatment of the relationship between law and ethics and lessons a manager could apply. Graduate papers that evaluate a legal response with evidence, rather than praising or condemning it, show the analysis the course objectives describe, and a scholarly source beyond the film strengthens the argument. Answers that connect culture to conduct with evidence, and evaluate whether the legal reforms addressed the causes, show the analysis the module expects. Mentors also credit a clear statement of what managers today can learn from the case. Papers that judge Sarbanes-Oxley against the specific failures at Enron, such as auditor independence and executive certification, earn more than general verdicts.
Common ETM 7500 Module 2 mistakes, and how to avoid them
Marks fall for retelling the film scene by scene, blaming a handful of executives while ignoring the system, or calling Sarbanes-Oxley a cure or a flop without evidence. Pick the mechanisms that drove behavior and show each with an example. Map the legal response to those causes. Say plainly what the law cannot reach and what managers must do instead. Pair the documentary with a peer-reviewed or book-length account. Keep each lesson specific enough to act on. A free first sample of your own ETM-7500 Module 2 paper can be requested. Name the cultural features that mattered, such as rewards for short-term results, and show how each contributed.
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ETM 7500 Module 2 questions, answered
Where can I find a free ETM 7500 Module 2 sample paper?
The Enron paper above analyzes the company's forced ranking, pay incentives and leadership culture and evaluates the Sarbanes-Oxley Act's response.
What was rank and yank at Enron?
Enron's performance review committee ranked employees against each other twice a year and pushed out the lowest-ranked group.
What does Sarbanes-Oxley Section 404 require?
Managers must evaluate their reporting controls, and at larger listed firms the auditor checks that work.
Did Sarbanes-Oxley prevent future fraud?
It raised the cost of misconduct and likely improved reporting, but it cannot control incentives and culture, so fraud remains possible.
How does culture affect business ethics?
Through what an organization rewards, punishes and tolerates, which teaches employees what is really valued more strongly than written codes.