Worldcom Case Study

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WorldCom Case Study: Lack of Leadership, Lack of Ethics

Emily Fearnow

ORG 500- Foundations of Effective Management

Colorado State University – Global Campus

Dr. Cheryl Lentz

May 15, 2011

WorldCom Case Study: Lack of Leadership, Lack of Ethics A multitude of choices made by executives at WorldCom led to the ultimate demise of the company as it was previously known, the employees and their livelihoods’, and the trust of the American people. In a time when corporations fail to set ethical standards and provide transparency to investors, how do we change corporate culture on a national level? By analyzing choices made to improve stock prices and company image that ultimately result in failure-- we can guide
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In this time Cooper was never thanked for her effort to maintain ethical business practices and to report inappropriate actions. Cooper has since moved on and left the company. WorldCom acquired Arthur Andersen as the independent external auditing for the company. As WorldCom grew after the merger with MCI, Andersen began to invoice less than they should have. The charges were defended as an opportunity to prolong business with WorldCom. (Kaplan and Kiron, 2007). This is an immediate red flag for a company. Where were the ethical practices of the independent auditor? If the auditor has no ethics, how can one possibly be assured that the company is performing its intended function appropriately? The board of directors should have immediately been informed of Andersen’s practices and made a decision to confront Andersen’s practices and possibly obtain new independent auditors.
The Board of non-Directors WorldCom’s board of directors was comprised mostly of “former owners, officers, or directors of companies acquired by WorldCom” (Kaplan and Kiron, 2007 p. 10). The Board and its Committees did not function in a way that made it likely that they would notice red flags. The outside Directors had little or no involvement in the Company’ s business other than through attendance at Board meetings. Nearly all of the Directors were legacies of companies that WorldCom, under Ebbers’ leadership, had acquired. They had ceded leadership to Ebbers when their

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