Merger between WorldCom and Sprint Corporation The past few years have been characterized by trends such as privatization, liberalization and deregulation in industries once managed by the government. Take the telecommunications sector as an example: In the early 1990s, over 129 countries set up privately owned regulatory agencies, and another 100 countries privatized the government-controlled telecom companies. The Federal Communication Commission (FCC) of the US telecom Industry strives to control competition, standardize prizes and inspect foreign communication. The same issues licenses to various service providers under their jurisdiction. The institution also helps telecom services across the country to establish themselves and get running. Protection of consumer rights is also part of their mandate. They are also the ones behind the National Broadband Plan (National Research Council, 1995).
The debate on the government policy on the information industry has been on for quite some time now. As a matter of fact, the telecommunications…...

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References

Baye, M., & Prince, J. (2017). Managerial Economics & Business Strategy (9th ed.). New York, NY: McGraw-Hill Education.

Berg, S. V., & Weisman, D. L. (1991). Berg Costing Principles. Costing Principles in The Telecommunications Industry, 8-15.

Blumenstein, R. (1999, September 24). MCI WorldCom, Sprint talking merger. Retrieved December 8, 2018, from

Cannon, R. (2000, January 26). MCI / Sprint Merger. Retrieved December 8, 2018, from http://www.cybertelecom.org/industry/mci_sprint.html

National Research Council. (1995). The Changing nature of telecommunications/information infrastructure. National Academies Press.

https://www.zdnet.com/article/mci-worldcom-sprint-talking-merger-5000103331/

Mark started acquiring more assets, the biggest, a 30-year concession to provide water and sewage services to two million residents of Argentina's Buenos Aires province, for which she paid three times the second highest bid.
Mark was determined to take Azurix public, giving her an independent company far removed from Jeff Skilling. In June 1999, she floated a third of the company at nineteen dollars per share, raising $695 million. Azurix however, was doomed from the start. Water is a localized business that lacks the continent-spanning pipelines and transmission systems that allow natural gas, oil and power to be moved and traded between locations, and could never be traded the same way. The regulated water business has extremely low margins, with utilities making money by cutting expenses to the bone, but Mark took the opposite approach. She ran Azurix as if money was never an issue, overpaying for acquisitions and…...

This value may not be immediately apparent, however, as investments are long-term projects, and expected to grow over time, hence a new factory is allowed to be accounted for differently than say, a new box of paperclips. But under orldCom's accounting system, a new ream of computer paper was just as much as a 'investment project' as introducing a new computer operating system designed to increase efficiency.
From an accounting perspective, this meant that orldCom could spread the costs of such fictional investment expenses over a number of years, instead of having to account for these outlays on a regular basis as expenditures that detracted from its profit margin. This made orldCom's profits look much greater than they were in comparison to its telecommunications rivals, had the figures been computed accurately, like other, competitor firms. Thus, the company seemed much more attractive to investors, because of this artificially inflated profit…...

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Works Cited

Arnold, James. (22 Jul 2002) "WorldCom's star falls to earth." BBC News. Retrieved 12 Dec 2006 at  http://news.bbc.co.uk/1/hi/business/2066885.stm 

U.S. telecom giant admits huge fraud." (26 Jun 2002) BBC News. Retrieved 12 Dec 2006 at  http://news.bbc.co.uk/1/hi/business/2066731.stm 

WorldCom: Why it matters." (26 Jun 2002) BBC News. Retrieved 12 Dec 2006 at  http://news.bbc.co.uk/1/hi/business/2066959.stm

Companies that stress financial results measured as earnings before interest, taxes, depreciation and amortization, should be one potential red flag for regulators (Krantz 2002:2).
Because it is extremely difficult for ordinary investors to carefully compare companies like orldCom with their rivals, so they can see how other companies capitalize their costs, this underlines the need for greater oversight of emerging technical companies, as well as large-scale firms, in terms of what constitutes a cost and an investment. The damage done by orldCom is not confined to its executives, accountants, and to the individuals who perpetuated the fraud, but the millions of ordinary employees and investors that relied upon the company for their livelihood. Nothing can restore the financially secure future these individuals expected. They assumed that they would be able to count on the now-bankrupt firm for their pension, health insurance, and future advancement. The FASB must issue more specific…...

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Works Cited

Krantz, Matt. (27 Jun 2002). "Accounting fraud: the problems."

USA Today. Retrieved 29 Jan 2008 at  http://www.usatoday.com/money/perfi/columnist/krantz/2007-10-24-accounting-fraud_N.htm

MCI- World Com
My name is Thada Parker, and I am submitting a suggestion that could make MCI World com be able to achieve its goal in maintaining its services to society. No one wants to see MCI-World com lose its business. You have brought the Internet to us, which has significantly advanced our lifestyles. As you know, the Internet has made a great contribution to the economy. I have read about the objectives of World com written by the Chief Executive, John Sidgemore, to continue to provide services to the community. The purpose of my paper to prove how MCI-World com can take every ones focus away from the accounting error and place the focus on the positive effects of the Internet that you brought to us by making the Internet much more widely available.

Every company has had setbacks and disappointments, and the accounting problem was major because your company…...

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Bibliography

Cymrot, Allen, (1999)

Our Current Economy: What's The Real Story?

A www.cymrot.com

Sidgemore, John, (2002)

Other stakeholders were not given a voice to participate in the decision- making discourse. Therefore, the principles that were constructed that allowed the executive financial team to make these decisions led to unethical results.
Statement of Position:

Once reviewing these three ethical concepts and using them to analyze the WorldCom scandal, it becomes clear that the actions of WorldCom were unethical. This was not a matter of simply not understanding the effects their deceitful actions would have, but purposeful deceptive strategies to fool investors and other stakeholders into thinking the company was financially healthier than it truly was.

Arguments in Support of this Position:

The events of the WorldCom scandal will forever be replayed in business and accounting history, along with the variety of other corporate fraud activities recorded in the late 1990s and early 2000s. Common to all ethical concepts is the concept of 'good' (Darwall, 2003). WorldCom's actions held none of…...

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References

Darwall, S. (2003 Apr). Moore, normativity, and intrinsic value. Ethics, 113(3). Retrieved December 4, 2006, from Academic OneFile database.

Evan, W.M., & Freeman, R.E. (1988) "A stakeholder theory of the modern corporation: Kantian capitalism," in T.L. Beauchamp and N. Bowie (eds.), Ethical Theory and Business (Englewood Cliffs, NJ: Prentice Hall): pp. 75-84.

Harsanyi, J.C. (1953), Cardinal utility in welfare economics and in the theory of risk-taking, Journal of Political Economy, 63, pp. 434-5.

Jeter, L. (2006 Oct 2). Former WorldCom chief begins prison sentence at Louisiana facility. Mississippi Business Journal, 28(40). Retrieved December 4, 2006, from InfoTrac OneFile database.

The first three organizations in line to recuperate their funds were Citigroup, J.P. Morgan and General Electric Group. They had been offering financial solutions and encouragement to purchase the WorldCom stock based on a favorable business relationship. However, at the time when bankruptcy procedures were commenced, the three organizations recognized their losses and intended to recuperate them.
A succinct presentation of the period surrounding the crisis could be reveled by the media stories:

27 June 2002 - information on the people affected by the WorldCom crisis become available - about 60 banks across the globe had granted loans to the organization or purchase bonds

27 June 2002 - SEC charges the organization with fraud and three organizational leaders are subpoenaed before a governmental committee

28 June 2002 - John Sidgmore announced a cut in costs by $1 billion and the downsize on 17,000 employees

U.S. President George Bush condemns organizational fraud and asks for…...

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References

Cooper, C., 2008, Extraordinary Circumstances: The Journey of a Corporate Whistleblower, John Wiley and Sons Inc.

Eichenwald, K., August 8, 2002, for WorldCom, Acquisitions Were Behind its Rise and Fall, New York Times

Faber, D., September 8, 2003, the Rise and Fraud of WorldCom, CNBC

McCafferty, J., July 2004, Extreme Makeover: How Robert Blakely and an Army of Accountants Turned Fraud-Ridden WorldCom into Squeaky-Clean MCI, CFO, No. 46

First, the decreasing subscription of land-line telephone service due to the proliferation of cellular technology. Since 2001, there has been a steady decline in market share of land-line telephones as more and more users chose to use cell phones as their permanent phone provider. WorldCom, with its specific focus still on land-line services has created a multitiered strategy to promote land-line use. They emphasize new packages that are more affordable than older packages, with shorter time commitments, as well as more land-line services than previous offers. WorldCom believes that this strategy promotes greater diversification of land-line services across many different platforms that will increase the overall usage and service provision for American consumers. The second major issue that impacts WorldCom's future strategic vision is the emergence of VIP services as a mode of land-line phone services. VIP (Voice over IP) are internet-based telephone services that utilize the internet connections…...

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Overall it is evident that WorldCom has suffered tremendously as a result of their illegal disclosure and accounting practices. They suffered complete negative publicity and branding in the wake of their scandal and now must attempt to resurrect its brand through its parent company. Either of these initiatives will be extremely hard in the much tighter competitive landscape of landline phones.

Lawson, Stephen. www.infoworld.comInfoWorld, January 06, 2006.

Lynne W. Jeter (2003). Disconnected: Deceit and Betrayal at WorldCom. Wiley

Worldcom financial disaster provided many substantial learning points while helping expose the importance of accuracy and integrity in accounting procedures and standards. Eight years ago, when the true nature of the rise and fall of this telecommunications giant became public, many in the financial sectors of the world demonstrated shock and disbelief at the remarkable scope of corruption seemingly stemming from this agency. The purpose of this essay is to highlight worthwhile lessons of the Worldcom accounting scandal occurring at the early part of this century in an attempt to gain understanding of the temptations, consequences and regulations of the ever changing world of finance and its accounting procedures.
Understanding and defining fraud is helpful in understanding the events of the Worldcom situation. My personal definition of fraud states that fraud is an intentional act to deceive another in order to gain a competitive advantage over that targeted person or group…...

Madoff Investment Securities LLC (BLMIS) committed one of the greatest financial frauds in U.S. history. Investigations revealed that Mr. Madoff operated an elaborate "Ponzi Scheme" that started operating in 1980s.Even though Madoff was initially supposed to invest all of his clients' money in the securities markets, he never did so. Instead, he deposited the whole amount in a certain bank account that he held with the Chase Manhattan Bank. He therefore fulfilled his client's redemption requests using his own money. The fraud value was estimated at $50 billion and became a matter of public knowledge only after Madoff confessed to the crime. It can be regarded as the biggest financial fraud in U.S.'s history and it affected a large number of investors.The financial industry blamed the investors as well as regulators for neglecting the various warning signals that enabled Maddoff to continue with the fraud for several decades.
The Board…...

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References

Akhigbe, A., Martin, A., and Whyte, A., (2005). Contagion effects of the world's largest bankruptcy: the case of WorldCom. The Quarterly Review of Economics and Finance

45 (2005) 48 -- 64

Haque, F., Arun, T., and Kirkpatrick, C (2008) "Corporate Governance and Capital Markets: A

Conceptual Framework," 'Journal of Corporate Ownership and Control', 5(2)

The reality was that a company which aspired to be "the No. 1 stock on all Street" was instead steadily bleeding money while claim growth in the billions.
The pressure placed upon accountants at ordCom was reflective of the pressure facing accountants throughout the economy during this period of widely absence securities oversight. Indeed, the relationship between regulation and accounting is essential, and this diminished link would have catastrophic implications for the profession as a whole. Such is shown by the Scott text, which tells that "efficient securities market theory has major implications for financial accounting. One of these is that supplementary information in financial statement notes or elsewhere is just as useful as information in the financial statements proper. Another is that efficiency is defined relative to a stock of publicly known information. Financial reporting has a role to play in improving the amount, timing, and accuracy of this…...

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Works Cited:

Kaplan, R.S. & Kiron, D. (2007). Accounting Fraud at WorldCom. Harvard Business School.

Scott, W.R. (2006). Financial Accounting Theory, 4th Ed. Pearson-Prentice Hall.

Skeel, D. (2005). Icarus in the Boardroom: The Fundamental Flaws in Corporate America and Where They Came From. Oxford University Press.

The first was the motivation on the part of Ebbers and Sullivan. The second was the complicity of employees within orldCom's accounting department. The third was the complicity of the external auditor, Arthur Andersen. In order to prevent such frauds from occurring, these different factors should be addressed. ith respect tot Ebbers and Sullivan, two problems occurred that should be prevented in future.
The first is the heavy emphasis on option-laden compensation. This created an incentive for Ebbers to manipulate the company's stock, as his options were under water. A greater emphasis on hard salary and bonuses would partially address this problem, or an emphasis on performance-based compensation that takes long-run performance into account would be more useful. In addition, too much control was held by too few. For instance, the internal auditor was informed by the external auditor that he only answered to Sullivan. This concentration of power enabled…...

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Works Cited:

BBC. (2002). Disgraced WorldCom faces fraud charge. British Broadcasting Corporation. Retrieved February 9, 2011 from  http://news.bbc.co.uk/1/hi/2068865.stm 

Pulliam, S. & Solomon, D. (2002). How three unlikely sleuths exposed fraud at WorldCom. Wall Street Journal. Retrieved February 9, 2011 from  http://www.happinessonline.org/MoralCode/LiveWithTruth/p23.htm 

SEC. (2003). Report of investigation. Securities and Exchange Committee. Retrieved February 9, 2011 from  http://www.sec.gov/Archives/edgar/data/723527/000093176303001862/dex991.htm

WorldCom
Prior to the corporate financial scandal, WorldCom was one of the largest long distance telephone companies (euters, 2003). Initially headquartered in Mississippi it later moved to Virginia. The company grew fast by acquiring other companies such as MCI Communications in 1998 and UUNET technology in 1996. Other companies acquired included, Metromedia in 1992, esurgens Communications Group in 1993. In the course of this acquisition spree, WorldCom undertook two complex takeovers. The first was the 1998 acquisition of CompuServe from H& Block where it retained the network division, sold off the online service to American Online (AOL) and the second, the acquisition of Digex in 2001, and disposed of all Digex assets to Allegiance Telecom (Kaplan & Kiron, 2004). With these acquisitions, it gained a favorable reputation in the market as a company with a solid foundation.

Facts of the WorldCom Case

The WorldCom fraud case is one of the largest corporate…...

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References

Kaplan, R.S., & Kiron, D. (2004). Accounting Fraud at WorldCom. HBS Premier Case Collection .

Reuters. (2003, April 14). WorldCom to emerge from collapse. Retrieved from www.cnn.com: http://edition.cnn.com/2003/Business/04/14/worldcom/

Ryerson, F. (2009). Improper Capitalization and The Management of Earnings. Las Vegas: Macon State College.

The Securities and Exchange Commission, 02 Civ. 3288 (United States District Court For the Southern District of New York June 26, 2002).

WorldCom Noose Getting Tighter: Bankruptcy Tough to Avoid" illustrates dramatic business news, relevant to current issues in the telecommunications slump. The WorldCom bankruptcy declaration is also personalized because it reminds the reader of the fragility of the economy as well as the possibility of individual financial ruin.
The fact that the $3.9 billion fraud disclosure was a "record" indicates controversy and drama, no doubt conflict-filled. Because this dollar amount is clearly stated as being a "record" signifies the novelty of this particular incident. That banks could "force" WorldCom into default depicts actual action in the business world. Newsworthiness of this piece increases with the stress on the sullying of the WorldCom name, which is "permanently scarred," and "damaged beyond repair."

Investors are angry, notes the journalist: the issue is personalized, identifiable, and conflict-filled. The mentioning of 20 million customers further drives home the fact that you, the reader, are directly affected.…...

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Photo of Baby Suicide Bomber Called a Joke" is filled with violent imagery that is linked to current, relevant political issues. That the photo is a joke is irrelevant in light of the reality of suicide bombers in Israel. This prank, called "Terror in Diapers," is a concrete event. It is also controversial, deviant, and novel. That a baby was dressed up as a suicide bomber evokes cruelty and hatred. The incident is dramatic and conflict-filled, but it is also personal: most readers will be able to relate to the sense of shock and horror induced by using a baby in this way. The journalist uses this novel incident to lead the reader into an analysis of current events in the Middle East. Reminding us of the reality of suicide bombers through this joke, the writer uses the opportunity to present both sides of prevalent political issues.

Xerox Reduces1996-2001 Revenues by 2%" describes the deviant, controversial behavior of a major corporation. Because Xerox is a recognizable name, the issue becomes personalized and relevant to current economic issues. Xerox "improperly recorded more revenue," which is a controversial, conflict-filled, and concrete event. The events of the impropriety are identifiable; the facts listed are dry and verifiable. Attempting to sensationalize the issue, the writer indicates that the company paid the largest levy "against a company for financial-reporting violations." Corporate deviance is as relevant and newsworthy as criminal deviance, especially to investors.

None of these articles contain all the components of newsworthiness. Only the "Photo of baby suicide bomber called 'a joke'" contains elements of violence. Although all three articles indicate some sort of action, none of them are particularly riveting narratives. Nevertheless, the issues are personalized enough to grab the reader's attention. The journalist in each case links the facts to prevalent current events: the business articles through economic issues and the photo article through political issues. All articles list concrete events that are identifiable; the facts are clear. The photo of the baby is of course the most novel and deviant of the three, as well as being the most dramatic. However, the writers of the WorldCom and Xerox pieces attempts to sensationalize their points by emphasizing corporate deviance. All three articles depict some type of controversy and conflict. Attention-grabbers are necessary for newspaper sales; therefore even the driest news must be made as controversial as possible.

Cooper/WorldCom
In 2001, WorldCom was a company at the top of its game. Although 2001 was difficult for them, it was difficult for all telephone companies. The number of local phone companies had dropped from 330 to 150 in 2000. They lost market share and encountered significant competition to their internet services. However, it still had more than $30 billion in annual revenues, and even after extensive layoffs, had over 60,000 employees (Warder, 2004), including Cynthia Cooper, Vice President of Internal Audit. They had over 20 million residential accounts, and business accounts well into five figures (Warder, 2004). They provided internet services to over 100 countries (Warder, 2004).

In spite of industry turmoil, Worldcom was optimistic about its long-term prospects, and CEO ernie Ebbers continued to make acquisitions for the company, leveraging them with company stock. These efforts put strains on customer support, which appeared to be a major reason for the…...

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Barrier, Michael. 2003. "One Right Path (Interview)." Internal Auditor, Dec.

Lacayo, Richard, and Ripley, Amanda. 2002. "Persons of the Year 2002: Q& A With the Whistle-Blowers." TIME, Dec. 22.

Warder, Zachary T. 2004. "Behind closed doors at WorldCom: 2001." Issues in Accounting Education, Feb.