Ethical Proposal For Worldcom

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I believe that the proposals will not be effective in preventing another WorldCom for several reasons. First, I believe that many companies operate within their own “corporate bubble” and that many officers and directors probably believe that the problems at WorldCom could never occur at their company. Because of this, they will largely ignore the corporate structural undertakings of companies around them. Next, very few boards will voluntarily shake things up at their company, especially if their growth and financials are positive. With the highly competitive nature of many industries, I can’t imagine too many company taking preemptive steps to change their corporate governance during a period of success, but in the case of WorldCom, ironically this successful growth period is exactly where they uncovered the wrongdoing. As a shareholder, you should always be asking questions about a company’s performance, even when they are outperforming. While Breeden’s proposal is certainly an outline for corporate governance success, due to human nature, the principle-agent problem will exist within companies that have less-than-reputable directors and officers. Another reason this report won’t stop another WorldCom from happening is that there is an inherent flaw in our corporate structure that doesn’t exist in the corporate structures in countries such as Japan and Germany. In those countries, the shareholder is not the primary stakeholder that a company looks to satisfy, but

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