Bernard Ebbers In The Accounting Fraud

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This paper evaluates the role played by Bernard Ebbers in the accounting fraud committed by WorldCom and in its demise resulting in the largest bankruptcy, at that time, in US history. A brief history of the expansion of the company will be followed by an explanation of the business strategy and methods used to grow the company to provide the context for the evaluation of Ebbers leadership style and his contribution to the fraud According to Kidwell & Martin (2005), Bernard Ebbers started out with a Motel chain, and after investing in a telecommunications company, LDDS, a retailer of long -distance telecommunication service, he gained control and became CEO of LDDS. The dominant strategies to make the company profitable were cost cutting…show more content…
Trevino & Brown (2005) explain social exchange as being influence asserted by Charismatic leaders through a relationship developed over time, in which reciprocity and fairness are expected, but where no formal transaction, enforceable by others, exists. Trevino & Brown (2005) explain social learning as learning by example, and learning “vicariously” by imagined participation in the punishment and reward of others. Trevino & Brown(2005) also suggest that the senior executives are responsible for the culture in an organization , and even by default, if they do not openly support something, because executives are assessed from a distance and by their reputation (Klebe Trevino, Brown, & Pincus Hartman, 2003) . Ebbers, could thus be said to have influenced the employees to be unethical through the method of social learning and exchange because he demonstrated unethical behaviour to the employees by not putting key financial transactions into writing when he gave loans to executives to buy stock without paperwork (Kidwell & Martin, 2005). Ebbers, could also be accused of creating a culture which protected the stock price at all costs because he became nasty when the company missed earnings by 1 cent (Kidwell & Martin, 2005) and which could have influenced people such as the Chief Financial Officer, Sullivan, to be unethical at a later

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