WorldCom Fraud Case

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In 1983, while in a small coffee shop in Hattiesburg Mississippi, Bernard Ebbers developed the business concept that would eventually become the second largest long distance telephone company in the United States, WorldCom (Romar and Calkins). In 2002, the company that Bernard Ebbers grew from the ground up declared the largest bankruptcy in United States history. The unethical and illegal accounting treatments that WorldCom participated in eventually led to the demise of the company and a new company, MCI, rising from the rubble of what was WorldCom. There were two main issues that provided pressure for the senior executives at WorldCom to commit fraud. WorldCom became the second largest long distance telephone company because of its execution of a very aggressive acquisition strategy (Moberg and Romar). During the years 1991 through 1997, WorldCom completed 65 acquisitions, the most notable being that of MFS Communications and MCI Communications (Moberg and Romar). At the height of WorldCom’s power, their stock was trading at upwards of $60 per share (Moberg and Romar). As the company’s stock continued to rise, WorldCom continued to acquire companies (Moberg and Romar). However, mergers and acquisitions create significant managerial challenges (Moberg and Romar). The first challenge is to combine the newly acquired company and the already existing company to create one smoothly functioning business (Moberg and Romar). This process can be extremely time consuming, and WorldCom executives did not seem to have the needed time. The second challenge is to account for the financial aspects of the acquisition (Moberg and Romar). During this process, all assets, debts, goodwill, and many other financial information must be ... ... middle of paper ... ...nsylvania. 14 March 2011 . Katz, David and Julia Homer. "WorldCom Whistle-blower Cynthia Cooper." 1 February 2008. CFO.com. 15 March 2011 . Moberg, Dennis and Edward Romar. "WorldCom." 2003. Markkula Center for Applied Ethics. 2 February 2011 . Pulliam, Susan and Deborah Solomon. "How Three Unlikely Sleuths Exposed Fraud at WorldCom." 30 October 2002. The Wall Street Journal Online. 2 February 2011 . Romar, Edward J. and Martin Calkins. "WorldCom Case Study Update 2006." February 2006. Markula Center for Applied Ethics. 2 February 2011 .

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