Worldcom Case Study

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THE ENTITY’S BACKROUND AND ITS ENVIRONMENT BACKROUND • WorldCom was a telecommunications company and one of the largest long distance phone companies in the United States of America before it filed for bankruptcy in 2002. It was initially established in 1983 in Mississippi as a small business providing long distance telephone services called LDDS (Long-Distance Discount Service) and an early investor by the name of Bernard Ebbers was made its chief executive officer (CEO). The company’s main strategy was to establish and expand itself by acquiring other companies in the same industry. It became a public traded company when it acquired Advantage Companies Inc. in 1989. It continued this trend as well as merging with other companies for several…show more content…
One of the agency’s objectives is to regulate competition in the provision of communication services and have a competitive framework in the industry that provides consumers reliable, meaningful choice in affordable services. WorldCom was greatly affected by this when its agreement to merge with Sprint Corp. was blocked by not only American regulators but European’s as well. The deal would have made WorldCom the largest telecommunications company in the US but had to be terminated as many perceived it would ultimately create a monopoly. (c) Other external factors • The emergence of a great oversupply in telecommunications capacity in the 1990s led to an economic problem. The industry rushed to build fiber optic networks and other infrastructure based on overly optimistic projections of internet growth. WorldCom along with other firms in the industry faced reduced demand and the economy entered into a recession. 2. Internal Factors/Nature of the Entity (a) Business Operations • Ownership and Governance…show more content…
In one interview, Mr. Myers states when he brought in the financial statements of the 4th quarter of 1999 to the CFO, which reflected negatively, he was told that his department had made an error and should rework them. Myers says he knew nothing was wrong with them but did not follow his professional judgement because he was under pressure from his senior. He continued making false figures in order for a positive reflection of the financials even though he knew what he was doing was wrong and unethical. Having worked for an accounting firm as big as Ernst & Young and for such a long period, Myers should have known and followed his moral

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