Ethics And Worldcom
Category: Business
Autor: yan000 01 March 2010
Words: 670 | Pages: 3
In the case of WorldCom, a national company that began in 1983 and would provide long-distance telephone services, it is hard to determine where the problem begins. The case, as explained in the book, has never really found the core of the problem. We are told that financial reports were falsely created and improper accounting practices were found, but who is to blame? The textbook tells us that several of the former top financial executives pleaded guilty to securities fraud, however they defended themselves to say that they were forced to cover things up by other top officials.
As reading through the questions given in class it was hard to completely gather all thoughts into one area. We know that World Com is a for profit organization that provided telecommunications to customers nation wide. The company began in the early 1980’s and it’s main marketplace was domestic, however their products were available for global use.
The practices of questionable accounting practices effected Worldcom’s investors the most. In the end, through the filing of bankruptcy and all of the other legal issues, it also affected the employees through layoffs and such. However, the investors were the ones who lost their money invested into the company. The investors were the primary Stakeholders affected through this issue as well. The stakeholder issues involved the investors as though they were investing into the purchase of stock for the company while there were internal audits going on throughout the company. While the audits were going on, no one outside of the company knew what was going on.
I think the main business ethical issue in the Worldcom case was the false reports and the idea that issues were held "secret" from the investors. It is morally wrong to withhold information from someone, especially someone who is investing so much money into something. Therefore the ethical issue that business decision makers lacked in this case what outright honesty and fairness. The decision makers had a responsibility to legally report accurate financial information and economically want to maximize the company’s wealth.
I think as a whole the accounting department heads at Worldcom were not organized. It seems as though someone knew what was going on and did nothing about it, or was trying to cover up improper areas with the hopes that the problems would all work themselves out over time.
The major corporate governance issues involved the shareholder’s rights. Each shareholder has a right to know what is going on within a company at any given time. Worldcom’s shareholders were not informed and in the end lost billions of dollars. As far as the corporate culture in this case though, it is not really discussed as to how employees were treated or what the environment was like as a whole, as it was in the Sunbeam case. Rather, it seems as though one situation was cover up by another situation in order to cover up something else with the hopes that someone would not find out. It appears as though loans were taken out to cover up other loans and no one wants to come forward and admit to being the source of the problem, so each person is blaming someone else. In the end by blaming each other it shows me that the organizational culture was apathetic… the investors were not thought of before the bad accounting practices were actually practiced. One even mentions blaming Arthur Anderson and noting that they knew about the bad accounting practices and did not tell, but without truth we may never know the whole story.
Overall, in the end, the company ended up filing for bankruptcy and the shareholders lost lots of money. It seems as though this could have been avoided if some big shot would not have tried to cover something up with high hopes. It proves that it only creates more trouble in the end.
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