The situation
- WorldCom is a telecommunications participation which was lead by CEO, Bernard Ebbers,
and CFO, Scott Sullivan.
- In 1999, WorldCom was not meeting Wall Street?s revenue and earnings expectations,
and it appeared that the coming year would produce more(prenominal) bad news.
- The CFO argued for setting realistic targets. However, the CEO insisted that the
company needed double digit growth, and pushed for militant targets. These
aggressive targets were not supported by historical data or strategical assessments.
- In regularize to meet these targets, WorldCom began boosting its revenue through a wide
range of accounting measures, including drawing down on militia set aside for
expenses. The economic situation at the meter was not taken into account when
implementing these aggressive accounting measures. separate similar companies were
reporting declining revenues.
- It was identified that the management who were making the aggressive accounting
decisions, were also posting the journals to the general ledger, and reviewing and
approving the reporting.
- Pressure was fixed on personnel who did not support the aggressive targets.
- A great deal of focus was put on police squad work and being a strong team actor, which is
said to have been a outline to reduce take issue opinions, eventually leading the
organisation to follow a groupthink attitude.
- In 2000, the telecommunications industry entered a downturn and WorldCom?s
aggressive growth strategy suffered a serious set back. However, due to the accounting
measures used, by Q3 in 2000, the company managed to meet the Wall Street
expectations.
- Finally, WorldCom?s stock damage started to plummet, and the CEO faced margin calls from
his bankers, forcing him to either sell his shares or repay the loans. He did not want to
sell his shares as his doing so would put further downward pressure on the stock price.
Therefore, WorldCom directors lent the CEO US$400 one thousand thousand to meet the...If you want to get a full essay, order it on our website: Orderessay
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