Assignment: WorldCom Case Study
The WorldCom case study addresses issues such as ethical considerations, marketing puffery, the Glass-Steagall Act and the Sarbanes-Oxley Act. Please review the case study and address the questions presented. Please research the Glass-Steagall Act and the Sarbanes-Oxley Act in order to address how these laws contributed to the WorldCom issue or to subsequent creation of additional Accounting Oversight.
Summarize your findings in a six to eight page paper addressing the questions and research related to the case. In your summary, please note a strategy that WorldCom's management could have implemented in order to minimize the risk and legal dispute related to the underlying issue. Please cite all sources.
Ethics WorldCom Case Study
Questions For Discussion
Using the Ethical Dilemma theories discussed in Chapter 2 and throughout the Jennings book, please address the following questions:
1. What are the ethical considerations involved in a company's decision to loan executives money to cover margin calls on their purchase of shares of company stock?
2. When well conceived and executed properly, a growth-through-acquisition strategy is an accepted method to grow a business. What went wrong at WorldCom? Is there a need to put in place protections to insure stakeholders benefit from this strategy? If so, what form should these protections take?
3. What are the ethical pros and cons of a banking firm giving their special clients privileged standing in "hot" IPO auctions? How does ethics differ from law?
4. Jack Grubman apparently lied in his official biography at Salomon Smith Barney. Isn't this simply part of the necessary role of marketing yourself? Is it useful to distinguish between "lying" and merely "fudging."?
5. Cynthia Cooper and her colleagues worried about their revelations bringing down the company. Her boss, Scott Sullivan, asked her to delay reporting her findings for one quarter. She and her team did not know for certain whether this additional time period might have given Sullivan time to "save the company" from bankruptcy. Assume that you were a member of Cooper's team and role-play this decision-making situation.
6. How did the repeal of the Glass-Steagall Act in 1999 contribute to ethical issues with WorldCom or to other financial institutions (especially during the housing-bubble during the mid-2000's)? Please research this Act and its implications.
7. What is the Sarbanes-Oxley Act? How did the financial discrepancy issues of WorldCom and Enron contribute to the need and creation of this law? What are the new mandates that the Act has created for publically traded corporations. What is PCOAB and how does it relate to the law?
Attachment:- Case.rar