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WorldCom Case Study1
By Dennis Moberg (Santa Clara University) and Edward Romar (University of Massachusetts-Boston)
(The original of this document can be found at the Santa http://www.scu.edu/ethics/dialogue/candc/cases/worldcom.html#one. Clara University website at

An update for this case is available at http://www.scu.edu/ethics/dialogue/candc/cases/worldcomupdate.html . Note that this update is not part of the syllabus for the PRM or Associate PRM exam. It is included for reference and explanation only.)

2002 saw an unprecedented number of corporate scandals: Enron, Tyco, Global Crossing. In many ways, WorldCom is just another case of failed corporate governance, accounting abuses, and outright greed. But none of these other companies had senior executives as colorful and likable as Bernie Ebbers. A Canadian by birth, the 6 foot, 3 inch former basketball coach and Sunday School teacher emerged from the collapse of WorldCom not only broke but with a personal net worth as a negative nine-digit number.2 No palace in a gated community, no stable of racehorses or multi-million dollar yacht to show for the telecommunications giant he created; only debts and red ink--results some consider inevitable given his unflagging enthusiasm and entrepreneurial flair. There is no question that he did some pretty bad stuff, but he really wasn't like the corporate villains of his day: Andy Fastow of Enron, Dennis Koslowski of Tyco, or Gary Winnick of Global Crossing.3 Personally, Bernie is a hard guy not to like. In 1998 when Bernie was in the midst of acquiring the telecommunications firm MCI, Reverend Jesse Jackson, speaking at an all-black college near WorldCom's Mississippi headquarters, asked how Ebbers could afford $35 billion for MCI but hadn't donated funds to local black students. Businessman LeRoy Walker Jr., was in the audience at Jackson's speech, and afterwards set him straight. Ebbers had given over $1 million plus loads of information technology to that black college. "Bernie Ebbers," Walker reportedly told Jackson, "is my mentor."4 Rev. Jackson was won over, but who wouldn't be by this erstwhile milkman and bar bouncer who serves meals to the homeless at Frank's Famous Biscuits in downtown Jackson, Mississippi, and wears jeans, cowboy boots, and a funky turquoise watch to work. It was 1983 in a coffee shop in Hattiesburg, Mississippi that Mr. Ebbers first helped create the business concept that would become WorldCom. "Who could have thought that a small business in itty bitty Mississippi would one day rival AT&T?" asked an editorial in Jackson, Mississippi's Clarion-Ledger newspaper.5 Bernie's fall-and the company's-was abrupt. In June 1999 with WorldCom's shares trading at $64, he was a billionaire,6 and WorldCom was the darling of the New Economy. By early May of 2002, Ebbers resigned his post as CEO, declaring that he was "1,000 percent convinced in my heart that this is a temporary thing."7 Two months later, in spite of Bernie's unflagging optimism, WorldCom declared itself the largest bankruptcy in American history.8 This case describes three major issues in the fall of WorldCom: the corporate strategy of growth through acquisition, the use of loans to senior executives, and threats to corporate governance created by chumminess and lack of arm's-length dealing. The case concludes with a brief description of the hero of the case-whistle blower Cynthia Cooper. The Growth through Acquisition Merry-Go-Round From its humble beginnings as an obscure long distance telephone company WorldCom, through the execution of an aggressive acquisition strategy, evolved into
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the second-largest long distance telephone company in the United States and one of the largest companies handling worldwide Internet data traffic.9 According to the WorldCom Web site, at its high point, the company
• • • • •

Provided mission-critical communications services for tens of thousands of businesses around the world Carried more international voice traffic than any other company Carried a significant amount of the world's Internet traffic Owned and operated a global IP (Internet Protocol) backbone that provided connectivity in more than 2,600 cities and in more than 100 countries Owned and operated 75 data centers on five continents. [Data centers provide hosting and allocation services to businesses for their mission-critical business computer applications.]10

WorldCom achieved its position as a significant player in the telecommunications industry through the successful completion of 65 acquisitions.11 Between 1991 and 1997, WorldCom spent almost $60 billion in the acquisition of many of these companies and accumulated $41 billion in debt.12 Two of these acquisitions were particularly significant. The MFS Communications acquisition enabled WorldCom to obtain UUNet, a major supplier of Internet services to business, and MCI Communications gave WorldCom one of the largest providers of business and consumer telephone service. By 1997, WorldCom's stock had risen from pennies per share to over $60 a share.13 Through what appeared to be a prescient and successful business strategy at the height of the Internet boom, WorldCom became a darling of Wall Street. In the heady days of the technology bubble Wall Street took notice of WorldCom and its then visionary CEO, Bernie Ebbers. This was a company "on the move," and Wall Street investment banks, analysts and brokers began to discover WorldCom's value and make "strong buy recommendations" to investors. As this process began to unfold, the analysts' recommendations, coupled with the continued rise of the stock market, made WorldCom stock desirable, and the market's view of the stock was that it could only go up. As the stock value went up, it was easier for WorldCom to use stock as the vehicle to continue to purchase additional companies. The acquisition of MFS Communications and MCI Communications were, perhaps, the most significant in the long list of WorldCom acquisitions. With the acquisition of MFS Communications and its UUNet unit, "WorldCom (s)uddenly had an investment story to offer about the value of combining long distance, local service and data communications."14 In late 1997, British Telecommunications Corporation made a $19 billion bid for MCI. Very quickly, Ebbers made a counter offer of $30 billion in WorldCom stock. In addition, Ebbers agreed to assume $5 billion in MCI debt, making the deal $35 billion or 1.8 times the value of the British Telecom offer. MCI took WorldCom's offer making WorldCom a truly significant global telecommunications company.15 All this would be just another story of a successful growth strategy if it weren't for one significant business reality--mergers and acquisitions, especially large ones, present significant managerial challenges in at least two areas. First, management must deal with the challenge of integrating new and old organizations into a single smoothly functioning business. This is a time-consuming process that involves thoughtful planning and considerable senior managerial attention if the acquisition process is to increase the value of the firm to both shareholders and stakeholders. With 65 acquisitions in six years and several of them large ones, WorldCom management had a
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great deal on their plate. The second challenge is the requirement to account for the financial aspects of the acquisition. The complete financial integration of the acquired company must be accomplished, including an accounting of assets, debts, good will and a host of other financially important factors. This must be accomplished through the application of generally accepted accounting practices (GAAP). WorldCom's efforts to integrate MCI illustrate several areas senior management did not address well. In the first place, Ebbers appeared to be an indifferent executive who "paid scant attention to the details of operations."16; For example, customer service deteriorated. One business customer's service was discontinued incorrectly, and when the customer contacted customer service, he was told he was not a customer. Ultimately, the WorldCom representative told him that if he was a customer, he had called the wrong office because the office he called only handled MCI accounts.17 This poor customer stumbled "across a problem stemming from WorldCom's acquisition binge: For all its talent in buying competitors, the company was not up to the task of merging them. Dozens of conflicting computer systems remained, local systems were repetitive and failed to work together properly, and billing systems were not coordinated."18 Poor integration of acquired companies also resulted in numerous organizational problems. Among them were:
• • •

Senior management made little effort to develop a cooperative mindset among the various units of WorldCom. Inter-unit struggles were allowed to undermine the development of a unified service delivery network. WorldCom closed three important MCI technical service centers that contributed to network maintenance only to open twelve different centers that, in the words of one engineer, were duplicate and inefficient. Competitive local exchange carriers (Clercs) were another managerial nightmare. WorldCom purchased a large number of these to provide local service. According to one executive, "the WorldCom model was a vast wasteland of Clercs, and all capacity was expensive and very underutilized. There was far too much redundancy, and we paid far too much to get it."19



Regarding financial reporting, WorldCom used a liberal interpretation of accounting rules when preparing financial statements. In an effort to make it appear that profits were increasing, WorldCom would write down in one quarter millions of dollars in assets it acquired while, at the same time, it "included in this charge against earnings the cost of company expenses expected in the future. The result was bigger losses in the current quarter but smaller ones in future quarters, so that its profit picture would seem to be improving."20 The acquisition of MCI gave WorldCom another accounting opportunity. While reducing the book value of some MCI assets by several billion dollars, the company increased the value of "good will," that is, intangible assets-a brand name, for example-by the same amount. This enabled WorldCom each year to charge a smaller amount against earnings by spreading these large expenses over decades rather than years. The net result was WorldCom's ability to cut annual expenses, acknowledge all MCI revenue and boost profits from the acquisition. WorldCom managers also tweaked their assumptions about accounts receivables, the amount of money customers owe the company. For a considerable time period, management chose to ignore credit department lists of customers who had not paid their bills and were unlikely to do so. In this area, managerial assumptions play two
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important roles in receivables accounting. In the first place, they contribute to the amount of funds reserved to cover bad debts. The lower the assumption of noncollectable bills, the smaller the reserve fund required. The result is higher earnings. Secondly, if a company sells receivables to a third party, which WorldCom did, then the assumptions contribute to the amount or receivables available for sale.21 So long as there were acquisition targets available, the merry-go-round kept turning, and WorldCom could continue these practices. The stock price was high, and accounting practices allowed the company to maximize the financial advantages of the acquisitions while minimizing the negative aspects. WorldCom and Wall Street could ignore the consolidation issues because the new acquisitions allowed management to focus on the behavior so welcome by everyone, the continued rise in the share price. All this was put in jeopardy when, in 2000, the government refused to allow WorldCom's acquisition of Sprint. The denial stopped the carousel, put an end to WorldCom's acquisition-without-consolidation strategy and left management a stark choice between focusing on creating value from the previous acquisitions with the possible loss of share value or trying to find other creative ways to sustain and increase the share price. In July 2002, WorldCom filed for bankruptcy protection after several disclosures regarding accounting irregularities. Among them was the admission of improperly accounting for operating expenses as capital expenses in violation of generally accepted accounting practices (GAAP). WorldCom has admitted to a $9 billion adjustment for the period from 1999 thorough the first quarter of 2002. Sweetheart Loans To Senior Executives Bernie Ebbers' passion for his corporate creation loaded him up on common stock. Through generous stock options and purchases, Ebbers' WorldCom holdings grew and grew, and he typically financed these purchases with his existing holdings as collateral. This was not a problem until the value of WorldCom stock declined, and Bernie faced margin calls (a demand to put up more collateral for outstanding loans) on some of his purchases. At that point he faced a difficult dilemma. Because his personal assets were insufficient to meet the call, he could either sell some of his common shares to finance the margin calls or request a loan from the company to cover the calls. Yet, when the board learned of his problem, it refused to let him sell his shares on the grounds that it would depress the stock price and signal a lack of confidence about WorldCom's future.22 Had he pressed the matter and sold his stock, he would have escaped the bankruptcy financially whole, but Ebbers honestly thought WorldCom would recover. Thus, it was enthusiasm and not greed that trapped Mr. Ebbers. The executives associated with other corporate scandals sold at the top. In fact, other WorldCom executives did much, much better than Ebbers did.23 Bernie borrowed against his stock. That course of action makes sense if you believe the stock will go up, but it's the road to ruin if the stock goes down. Unlike the others, he intended to make himself rich taking the rest of the shareholders with him. In his entire career, Mr. Ebbers sold company shares only half a dozen times. Detractors may find him irascible and arrogant, but defenders describe him as a principled man.24 The policy of boards of directors authorizing loans for senior executives raises eyebrows. The sheer magnitude of the loans to Ebbers was breathtaking. The $341 million loan the board granted Mr. Ebbers is the largest amount any publicly traded company has lent to one of its officers in recent memory.25 Beyond that, some question whether such loans are ethical. "A large loan to a senior executive epitomizes concerns
WorldCom Case Study 4

about conflict of interest and breach of fiduciary duty," said former SEC enforcement official Seth Taube.26 Nevertheless, 27percent of major publicly traded companies had loans outstanding for executive officers in 2000 up from 17percent in 1998 (most commonly for stock purchase but also home buying and relocation). Moreover, there is the claim that executive loans are commonly sweetheart deals involving interest rates that constitute a poor return on company assets. WorldCom charged Ebbers slightly more than 2percent interest, a rate considerably below that available to "average" borrowers and also below the company's marginal rate of return. Considering such factors, one compensation analyst claims that such lending "should not be part of the general pay scheme of perks for executives. I just think it's the wrong thing to do."27 What's a Nod or Wink Among Friends? In the autumn of 1998, Securities and Exchange Commission Chairman Arthur Levitt Jr. uttered the prescient criticism, "Auditors and analysts are participants in a game of nods and winks."28 It should come as no surprise that it was Arthur Andersen that endorsed many of the accounting irregularities that contributed to WorldCom's demise.29 Beyond that, however, were a host of incredibly chummy relationships between WorldCom's management and Wall Street analysts. Since the Glass-Steagall Act was repealed in 1999, financial institutions have been free to offer an almost limitless range of financial services to their commercial and investment clients. Citigroup, the result of the merger of Citibank and Travelers Insurance Company, which owned the investment bank and brokerage firm Solomon Smith Barney, was an early beneficiary of investment deregulation. Citibank regularly dispensed cheap loans and lines of credit as a means of attracting and rewarding corporate clients for highly lucrative work in mergers and acquisitions. Since WorldCom was so active in that mode, their senior managers were the targets of a great deal of influence peddling by their banker, Citibank. For example, Travelers Insurance, a Citigroup unit, lent $134 million to a timber company Bernie Ebbers was heavily invested in. Eight months later, WorldCom chose Salomon Smith Barney, Citigroup's brokerage unit, to be the lead underwriter of $5 billion of its bond issue.30 But the entanglements went both ways. Since the loan to Ebbers was collateralized by his equity holdings, Citigroup had reason to prop up WorldCom stock. And no one was better at that than Jack Grubman, Salomon Smith Barney's telecommunication analyst. Grubman first met Bernie Ebbers in the early 1990s when he was heading up the precursor to WorldCom, LDDS Communications. The two hit it off socially, and Grubman started hyping the company. Investors were handsomely rewarded for following Grubman's buy recommendations until stock reached its high, and Grubman rose financially and by reputation. In fact, Institutional Investing magazine gave Jack a Number 1 ranking in 1999,31 and Business Week labeled him "one of the most powerful players on Wall Street.32 The investor community has always been ambivalent about the relationship between analysts and the companies they analyze. As long as analyst recommendations are correct, close relations have a positive insider quality, but when their recommendations turn sour, corruption is suspected. Certainly Grubman did everything he could to tout his personal relationship with Bernie Ebbers. He bragged about attending Bernie's wedding in 1999. He attended board meeting at WorldCom's headquarters. Analysts at competing firms were annoyed with this chumminess. While the other analysts strained to glimpse any tidbit of information from the company's conference call, Grubman would monopolize the conversation with comments about "dinner last night."33

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It is not known who picked up the tab for such dinners, but Grubman certainly rewarded executives for their close relationship with him.34 Both Ebbers and WorldCom CFO Scott Sullivan were granted privileged allocations in IPO (Initial Public Offering) auctions. While the Securities and Exchange Commission allows underwriters like Salomon Smith Barney to distribute their allotment of new securities as they see fit among their customers, this sort of favoritism has angered many small investors. Banks defend this practice by contending that providing high-net-worth individuals with favored access to hot IPOs is just good business.35 Alternatively, they allege that greasing the palms of distinguished investors creates a marketing "buzz" around an IPO, helping deserving small companies trying to go public get the market attention they deserve.36 For the record, Mr. Ebbers personally made $11 million in trading profits over a four-year period on shares from initial public offerings he received from Salomon Smith Barney.37 In contrast, Mr. Sullivan lost $13,000 from IPOs, indicating that they were apparently not "sure things."38 There is little question but that friendly relations between Grubman and WorldCom helped investors from 1995 to 1999. Many trusted Grubman's insider status and followed his rosy recommendations to financial success. In a 2000 profile in Business Week, he seemed to mock the ethical norm against conflict of interest: "What used to be a conflict is now a synergy," he said at the time. "Someone like me would have been looked at disdainfully by the buy side 15 years ago. Now they know that I'm in the flow of what's going on."39 Yet, when the stock started cratering later that year, Grubman's enthusiasm for WorldCom persisted. Indeed, he maintained the highest rating on WorldCom until March 18, 2002, when he finally raised its risk rating. At that time, the stock had fallen almost 90 percent from its high two years before. Grubman's mea culpa to clients on April 22 read, "In retrospect the depth and length of the decline in enterprise spending has been stronger and more damaging to WorldCom than we even anticipated."40 An official statement from Salomon Smith Barney two weeks later seemed to contradict the notion that Grubman's analysis was conflicted: "Mr. Grubman was not alone in his enthusiasm for the future prospects of the company. His coverage was based purely on information yielded during his analysis and was not based on personal relationships."41 Right. On August 15, 2002, Jack Grubman resigned from Salomon where he had made as much as $20 million/year. His resignation letter read in part, "I understand the disappointment and anger felt by investors as a result of [the company's] collapse, I am nevertheless proud of the work I and the analysts who work with me did."42 On December 19, 2002, Jack Grubman was fined $15 million and was banned from securities transactions for life by the Securities and Exchange Commission for such conflicts of interest. The media vilification that accompanies one's fall from power unearthed one interesting detail about Grubman's character-he repeated lied about his personal background. A graduate of Boston University, Mr. Grubman claimed a degree from MIT. Moreover, he claimed to have grown up in colorful South Boston, while his roots were actually in Boston's comparatively bland Oxford Circle neighborhood.43 What makes a person fib about his personal history is an open question. As it turns out, this is probably the least of Jack Grubman's present worries. New York State Controller H. Carl McCall sued Citicorp, Arthur Andersen, Jack Grubman, and others for conflict of interest. According to Mr. McCall, "This is another case of corporate coziness costing investors billions of dollars and raising troubling questions about the integrity of the information investors receive."44

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The Hero of the Case No integrity questions can be raised about Cynthia Cooper whose careful detective work as an internal auditor at WorldCom exposed some of the accounting irregularities apparently intended to deceive investors. Originally assigned responsibilities in operational auditing, Cynthia and her colleagues grew suspicious of a number of peculiar financial transactions and went outside their assigned responsibilities to investigate. What they found was a series of clever manipulations intended to bury almost $4 billion in misallocated expenses and phony accounting entries.45 A native of Clinton, Mississippi, where WorldCom's headquarters was located, Ms. Cooper conducted her detective work was in secret, often late at night to avoid suspicion. The thing that first aroused her curiosity came in March 2002 when a senior line manager complained to her that her boss, CFO Scott Sullivan, had usurped a $400 million reserve account he had set aside as a hedge against anticipated revenue losses. That didn't seem kosher, so Cooper inquired of WorldCom's accounting firm, Arthur Andersen. They brushed her off, and Ms. Cooper decided to press the matter with the board's audit committee. That put her in direct conflict with her boss, Sullivan, who ultimately backed down. The next day, however, he warned her to stay out of such matters. Undeterred and emboldened by the knowledge that Andersen had been discredited by the Enron case and that the SEC was investigating WorldCom, Cynthia decided to continue her investigation. Along the way, she learned of a WorldCom financial analyst who was fired a year earlier for failing to go along with accounting chicanery.46 Ultimately, she and her team uncovered a $2 billion accounting entry for capital expenditures that had never been authorized. It appeared that the company was attempting to represent operating costs as capital expenditures in order to make the company look more profitable. To gather further evidence, Cynthia's team began an unauthorized search through WorldCom's computerized accounting information system. What they found was evidence that fraud was being committed. When Sullivan heard of the ongoing audit, he asked Cooper to delay her work until the third quarter. She bravely declined. She went to the board's audit committee and in June, Scott Sullivan and two others were terminated. What Ms. Cooper had discovered was the largest accounting fraud in U.S. history.47 As single-minded as Cynthia Cooper appeared during this entire affair, it was an incredibly trying ordeal. Her parents and friends noticed that she was under considerable stress and was losing weight. According to the Wall Street Journal, she and her colleagues worried "that their findings would be devastating to the company [and] whether their revelations would result in layoffs and obsessed about whether they were jumping to unwarranted conclusions that their colleagues at WorldCom were committing fraud. Plus, they feared that they would somehow end up being blamed for the mess."48 It is unclear at this writing whether Bernie Ebbers will be held responsible for the accounting irregularities that brought down his second in command. Jack Grubman's final legal fate is also unclear. While the ethical quality of enthusiasm and sociability are debatable, the virtue of courage is universally acclaimed, and Cynthia Cooper apparently has it. Thus, it was not surprising that on December 21, 2002, Cynthia Cooper was recognized as one of three "Persons of the Year" by Time magazine. Questions For Discussion 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?
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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? 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. Copyright © 2003 by Dennis Moberg, Santa Clara University and Edward Romar, University of Massachusetts‐Boston. Reprinted with permission. This case was made possible by a Hackworth Faculty Research Grant from the Markkula Center for Applied Ethics, Santa Clara University. 2 This is only true if he is liable for the loans he was given by WorldCom. If he avoids those somehow, his net worth may be plus $8.4 million according to the Wall Street Journal (see S. Pulliam & J. Sandberg [2002]. WorldCom Seeks SEC Accord As Report Claims Wider Fraud [November 5], A‐1). 3 Colvin, G. (2002). Bernie Ebbers' Foolish Faith. Fortune, 146, (11 [November 25]), 52. 4 Padgett, T., & Baughn, A. J. (2002). The Rise and Fall of Bernie Ebbers. Time, 159, (19 [May 12]), 56+. 5 Padgett, T., & Baughn, A. J. (2002). The Rise and Fall of Bernie Ebbers. Time, 159, (19 [May 12]), 56+. 6 Young, S., & Solomon, D. (2002). WorldCom Backs Chief Executive For $340 Million. Wall Street Journal (February 8), B‐1. 7 Ibid. 8 Romero, Simon, & Atlas, Rava D. (2002). WorldCom's Collapse: The Overview. New York Times (July 22), A‐1 9 Ibid. 10 WorldCom website, (www.worldcom.com/global/about/facts/). 11 Eichenwald, Kurt (2002). For WorldCom, Acquisitions Were Behind its Rise and Fall, New York Times (August 8), A‐1. 12 Romero & Atlas, op. cit. 13 Browning, E. S. (1997). Is the Praise for WorldCom Too Much? Wall Street Journal (October 8), p. C‐24. All acquisition amounts are taken from this article. 14 Eichenwald, Op. cit., p. A‐3. 15 Ibid. 16 Ibid. 17 Ibid. 18 Ibid. 19 Ibid. 20 Ibid. 21 Ibid., p. A‐5; Sender, Henry (2002), Inside the WorldCom Numbers Factory, Wall Street Journal (August 21), C‐1. 22 Solomon, D., & Blumenstein, R. (2002). Telecom: Mississippi blues: Loans Proved to be Ebber's Downfall. Wall Street Journal (May 1), A‐8. 23 According to David Leonhardt of the New York Times (8/25/02, p. 10), Director Francesco Galesi made $31 million, John Sidgmore, the senior manager who replaced Ebbers as CEO, made $25 million, and CFO Scott Sullivan, who many think was responsible for the accounting abuses at World Com, pocketed $23 million. 24 According to David Leonhardt of the New York Times (8/25/02, p. 10), Director Francesco Galesi made $31 million, John Sidgmore, the senior manager who replaced Ebbers as CEO, made $25 million, and CFO Scott Sullivan, who many think was responsible for the accounting abuses at World Com, pocketed $23 million. 25 Solomon, D., & Sandberg, J. (2002). Leading the News. Wall Street Journal (November 6). A‐3. Report that Bernie used 8% of this load for personal use, an uncharacteristically self‐serving move for Mr. Ebbers. 26 Young, S. (2002). Big WorldCom Loan May Have Spurred Inquiry. Wall Street Journal (March 14), A‐3.
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Young, S. (2002). Big WorldCom Loan May Have Spurred Inquiry. Wall Street Journal (March 14), A‐3. Byrne, J. A. (2002). Fall from grace: Joe Berardino Presided Over the Biggest Accounting Scandals Ever and the Demise of a Legendary Firm. Business Week (August 12), 50+. 29 These amounted to over $9 million in overstated income. For an explanation as to how some of this was done, see. Elstrom, P. (2002). How to Hide $3.8 billion in Expenses. Business Week (July 8), 41+. 30 Morgenson, G. (2002). More Clouds Over Citigroup in its Dealings with Ebbers. New York Times (November 3), 1. 31 Smith, R., & Solomon, D. (2002). Heard on the Street. Ebber's Exit Hurts WorldCom's Biggest Fan. Wall Street Journal (May 3), C‐1. 32 Rosenbush, S. (2002). Inside the Telecom Game. Business Week (August 5), p. 34+. 33 Ibid. 34 On December 20, 2002, Jack Grubman was fined $15 million and was banned for securities transactions for life by the Securities and Exchange Commission for such conflicts of interest. 35 Editors. (2002). Citi Defends IPO Allocations to Shamed WorldCom Execs. Euroweek (August 30), 18. 36 Murray, A. (2002). Political Capital: Let Capital Markets, Not Financial Firms, Govern Fate of IPOs. Wall Street Journal (September 10), A‐4 37 Craig, S. (2002). Offerings Were Easy Money for Ebbers. Wall Street Journal (September 3), C‐1. 38 Ibid. 39 Rosenbush, op. cit., 34. 40 Smith, op. cit., C‐1 41 Ibid. 42 Editors. (2002). Salomon's Jack Grubman Resigns. United Press International (August 15), 10082777w0186. 43 Rosenbush, op. cit., 34. 44 Weil, J. (2002). Leading the News: An Ebbers' Firm Got Citigroup loans. Wall Street Journal (October 14), A‐3. 45 Pelliam, S. (2002). Questioning the Books: WorldCom Memos Suggest Plan to Bury Financial Misstatements. Wall Street Journal (July 9), A‐8. 46 Orey, M. (2002). Career Journal: WorldCom‐Inspired 'Whistle‐Blower' Law has Weaknesses. Wall Street Journal (October 1), B‐1. 47 Colvin, G. (2002). Wonder Women of Whistleblowing. Fortune (August 12), 56+. 48 Pelliam, S., & Solomon, D. (2002). Uncooking the Books: How Three Unlikely Sleuths Discovered Fraud at WorldCom. Wall Street Journal (October 30), A‐1.
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...CASE STUDY COMPONENTS: Introduction: Identify case study topic and list assertions (3-6) that can be verified with evidence (field notes, interviews, etc.) 1. Assertions and Evidence: Discuss each assertion separately (minimum one paragraph for each assertion) and include supportive evidence. Underline assertion statements as presented. 2. Implications/Effects: Conclude with an interpretive discussion of implications/effects. Inferences and conclusions based on evidence presented can be drawn. SAMPLE CASE STUDY FOCUSING ON MANAGEMENT STRATEGIES: Management Case Study Introduction Throughout the study, Shelley’s class was well managed. Explanations and evidence to support the following six assertions regarding Shelley’s management style are presented: 1. Shelley did not focus extensively on behavior management; 2. Shelley monitored student behavior throughout lessons; 3. Shelley promptly dealt with potential disruptive behavior; 4. Shelley reinforced acceptable behavior; 5. Shelley was very tolerant of student interaction and discussion; and, 6. Shelley devoted a great deal of time to task management. Assertions and Evidence Throughout the study, Shelley did not focus extensively on behavior management. On most days, the students in Shelley’s class were very well behaved and seemed to be familiar with Shelley’s rules regarding classroom behavior...

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...Case 1. STATE UNIVERSITY BOARD OF REGENTS: What Am I Living For? Question: Is there anything wrong with the actions of the three personalities in this case? Elaborate your answer. After reading the case study and analyzing it, from my opinion I think yes there is anything wrong with the actions of the three personalities- Mr.Bondoc, his wife and Dr. Agao. For elaboration I will explain them one by one. Mr.Bondoc acted as the champion of the student’s cause therefore it’s his responsibility to fight for the own good of the students, the one who will voice out their stands and if possible disagree to the proposals that may greatly affect them like increasing of their tuition fee.It’s great that he has the attitude of convincing others in personal way for them to agree of opposing the proposals of Dr. Agao because of this they can stop his proposals. He must maintain and assure that he is doing his job and must not allow others to control him in bad way or stop him to do his obligation but stated on the case study his wife wished him to maintain good relationship with Dr.Agao which unfortunately leads him to suddenly accept his proposals. It showed that he let others dictate him what to do and failed to do his job. About the wife of Mr.Bondoc, she was carried away by the good actions showed by Dr. Agao without knowing his real intentions of befriending her. Shecan be easily manipulated like what Dr. Agao wanted her to do through doing special treatments...

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...Case Study for “Carl Robins a new employee for ABC, Inc.” Rodrequez M. Dover University of Phoenix Class: Comm/215 Essential of College writing Author Note This paper is my first case study report. My thesis for this report is: It is important before hiring for any job that we check all the requirements for the new recruits, and that we have all the things require for their training.". In this case study we learn quickly that Carl Robing was new at ABC, Inc. as a recruiter and he had recruited 15 new trainees to work for Monica Carrolls. We also learn that he did not have a outline or a way to keep up with what he would need for the new hires to start on time. Carl did not do some of the most important steps to make sure that this hiring process went off without a hitch. He did not secure the room that they would us for training or make sure that all the orientation manuals were correct. Carl did not make sure that all there information was in the system nor did he set up there mandatory drug screen. Carl upon receiving his new job should have took the time to research what he would be doing in his new position and what was the companies’ policies for each thing that he would be doing. I feel if Mr. Robing had done that doing his training he would have been better able to execute the task of hiring new trainees. I know some of you may be thinking how you know that they have these policies glad you asked. I know because the drug test was mandatory...

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...Case Study: Trip Seven Screen Printing Carolina Barvo Vilaro, Professor Terrell Jones Purchasing Management TRA3132 Florida State College at Jacksonville ABSTRACT This paper has the purpose to analyze the case study of Trip Seven Screen Printing. Through this paper I will discusses viable solutions for the problem that arise with the current supplier of Trip Seven Screen Printing. INTRODUCTION Being in constantly communication with suppliers, meet with the payments and be transparent in what both parties need at the time of generating an order, it will allow supplier to deliver a quality product or service, and achieve the expectations of the customer. It is important to build a good relationships with suppliers. It is a characteristic that e companies should take in consideration to succeed in the market. This will allow them to get good results for their business, improve the quality of the inputs and achieve future agreements which are beneficial for the company. Proper coordination with vendors allows companies to produce a better final product or service, which will generate greater customer satisfaction and, therefore, higher sales for the business. The good relationship becomes more crucial in the case of companies that rely on a provider in specific. This can be related to the case study in which Trip Seven Screen Printing has as a unique supplier, American Apparel, even though their relation has been satisfactory for the past years, recently, issues...

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...Case Study: Considerations on group development Case Study: Considerations on group development In the current business world, several organizations have adopted the idea of creating a team to address an emergency situation, to improve something that is idling or to create a new thing from scratch, all in order to work in a more effective and efficient way. Every group faces challenges and victories, even if small ones. According to Robbins and Judge, “Teams are more flexible and responsive to changing events than traditional departments or other forms of permanent groupings. They can quickly assemble, deploy, refocus, and disband”. (Robbins 308) It is with this in mind that this paper will analyze the case study number 3, “ Building a Coalition”, and develop thoughts and considerations about the issues in the study, connecting them to the theory on building teams. Group Development The story begins with the creation of a new agency by the Woodson Foundation, a nonprofit social service agency, and the public school system in Washington D.C., with the participation of the National Coalition for Parental Involvement in Education (NCPIE), which is an organization of parents that is involved in the school through the Parent Teacher Association (PTA). They share a common interest in building this new agency in order to create an after school program to help students learn. The three separate groups opted to develop a cross-organizational development team, responsible for...

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...Case Study 1: Prelude To A Medical Error 1. Background Statement My case study is over chapters 4 and 7. The title is Prelude to a Medical Error. In this case study, Mrs. Bee is an elderly woman who was hospitalized after a bad fall. After her morning physical therapy, Mrs. Bee felt she could not breathe. Mrs. Bee had experienced terrible spasms in her left calf the previous evening and notified Nurse Karing. Nurse Karing proceeded to order a STAT venous Doppler X-ray to rule out thrombosis. She paged Dr. Cural to notify him that Mrs. Bee was having symptoms of thrombosis. Dr. Cural was upset that he was being bothered after a long day of work and shouted at the nurse, telling her he had evaluated Mrs. Bee that morning and to cancel the test. When Nurse Karing returned to the hospital the next day, Mrs. Bee’s symptoms were worse. She ordered the test. After complications, Dr. Krisis from the ER, came immediately to help stabilize Mrs. Bee. Unaware of Nurse Karing’s call to Dr. Cural, Dr. Krisis assumed the nursing staff was at fault for neglecting to notify Dr. Cural of Mrs. Bee’s status change the previous evening. Denying responsibility, Dr. Cural also blames the nursing staff for not contacting him. Not being informed of Mrs. Bee’s status change, her social worker, Mr. Friendly, arrives with the news that her insurance will cover physical therapy for one week at a rehabilitation facility and they will be there in one hour to pick her up. An angry Nurse Karing decides...

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...1. In the case of Retrotonics, Masters’ management style has several features ,such as disrespecting and improper decision-making. Firstly, Masters ignored his subordinates’ feeling which make them embarrassed. For example, the production manager, Lee, who suffered Masters’ criticism in front of other employees(Drew 1998, para 4). Although employees need the evaluation from the manager, they tend to accept the criticism privately. Another factor of Masters’ management style is making decisions in improper ways. According to Drew(1998, para 3), Master set difficult and stressful deadlines for the staff. This is the main reason why employees in engineering apartment are stressed. Therefore, those decisions that Masters made have negative effects on both staff and productivity. 2. There are three management styles are suit for Masters’ situation, in terms of delegating, democratic style and autocratic style. Firstly, delegating which is an important competence for managers. Delegating can avoid to interferes in management. In Masters’ case, Imakito and Lee are experienced and professional in their work. Hence, delegating assignments to them is a method to achieve the business goals effectively. Furthermore, democratic style which encourage employees to share their own opinions and advice is suit for manage the engineering department, because most staff in this department are experts in their work(Hickey et al 2005, pp.27-31). Having more discussions and communication with those...

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...Case Study 3 Randa Ring 01/25/2012 HRM/240 1. How did the problems at Deloitte & Touche occur in the first place? I feel that the problem began in the work environment. It looks as if there was limited opportunity for advancement. As well that the company was not able to handle issues that a raised from work and family. I think that it was a wonderful idea to have the company made up of women. I feel that it was a very positive thing because a lot of their issues where not geared towards men. 2. Did their changes fix the underlying problems? Explain. Yes I feel that the changes that they made did fix some of their underlying problems. With them keeping their women employees no matter what position that they were in at the time went up. For the first time the turnover rates for senior managers where lower for women than men. 3. What other advice would you give their managers? They really need to watch showing favoritism towards the women. They did to treat everyone as an equal. I also feel that they should make the changes geared towards the men and women’s issues that have to deal with family and work. 4. Elaborate on your responses to these questions by distinguishing between the role of human resources managers and line managers in implementing the changes described in this case study When it comes to Human resource managers, they will work with the managers in implementing changes. As well they will make a plan to show new and current...

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...A Case Study by any Other Name Cathy Foster Liberty University   A Case Study by any other Name Researchers have different methods of observing their subjects. Among the most popular is the case study. Case studies are used a lot in psychology and one of the most famous psychologists that used case studies to detail the private lives of his patients was Sigmund Freud. What is a Case Study? “A case study is an observational method that provides a description of an individual” (Cozby & Bates, 2012). During a case study the individual is usually a person however that’s not always the situation. The case study can also be a setting, which can include a school, business, or neighborhood. A naturalistic observational study can sometimes be called a case study and these two studies can overlap (Cozby & Bates, 2012). Researchers report information from the individual or other situation, which is from a “real-life context and is in a truthful and unbiased manner” (Amerson, 2011). What are some Reasons for Using a Case Study Approach? There are different types of case studies. One reason to use a case study is when a researcher needs to explain the life of an individual. When an important historical figure’s life needs explaining this is called psychobiography (Cozby & Bates, 2012). The case study approach help answer the “how”, “what”, and “why” questions (Crowe, 2011). What are Some Advantages and Disadvantages to the Case Study Approach? Some advantages...

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...Case study analysis CASE METHOD EXERCISE: ABERCROMBIE & FITCH (by Meg Connolly, in Marketing Ethics: Cases and Readings (2006), edited by Patrick E. Murphy and Gene R. Laczniak) Abercrombie & Fitch (A&F) of today differs dramatically from the original waterfront shop in New York that carried high-quality clothing suitable for camping, fishing and hunting. The A&F of 2002 can be found in virtually any major mall in America, and its target market includes preteen and teenagers. Indeed, the shift has been rather dramatic, and it could certainly be asserted that the direction A&F has recently headed strays substantially from the original vision of its founders. The style of clothes offered by A&F could be described as worn, casual, and rather rugged. Some critics contend the merchandise at A&F is seemingly overpriced considering that it is arguably no more unique than any other store of its kind geared toward the same market. One aspect of A&F that does make it unique from other stores, however, is their catalogue that was first published in 1997 and comes out four times a year with a spring break, summer, back-to-school, and Christmas issue. The Quarterly is a magazine-hybrid that, in addition to the clothing portion of the catalogue, has interviews with actors, musicians, directors and even some famous scholars. Fashion legend Bruce Weber does many of the photographs that appear throughout the magazine, and “these photos depict young, healthy, presumably red-blooded...

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...Case Studies  Engineering Subject Centre Case Studies:  Four Mini Case Studies in  Entrepreneurship  February 2006 Authorship  These case studies were commissioned by the Engineering Subject Centre and were written  by: · Liz Read, Development Manager for Enterprise and Entrepreneurship (Students) at  Coventry University  Edited by Engineering Subject Centre staff.  Published by The Higher Education Academy ­ Engineering Subject Centre  ISBN 978­1­904804­43­7  © 2006 The Higher Education Academy ­ Engineering Subject Centre Contents  Foreword...................................................................................................5  1  Bowzo: a Case Study in Engineering Entrepreneurship ...............6  2  Daniel Platt Limited: A Case Study in Engineering  Entrepreneurship .....................................................................................9  3  Hidden Nation: A Case Study in Engineering Entrepreneurship11  4  The Narrow Car Company...............................................................14 Engineering Subject Centre  Four Mini Case Studies in Entrepreneurship  3  Foreword  The four case studies that follow each have a number of common features.  They each  illustrate the birth of an idea and show how that idea can be realised into a marketable  product.  Each case study deals with engineering design and development issues and each  highlights the importance of developing sound marketing strategies including market ...

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...Case Study Southwestern University Southwestern University (SWU), a large stage college in Stephenville, Texas, 20 miles southwest of the Dallas/Fort Worth metroplex, enrolls close to 20,000 students. In a typical town-gown relationship, the school is a dominant force in the small city, with more students during fall and spring than permanent residents. A longtime football powerhouse, SWU is a member for the Big Eleven conference and is usually in the top 20 in college football rankings. To bolster its chances of reaching the elusive and long-desired number-one ranking, in 2001, SWU hired the legendary BoPitterno as its head coach. One of Pitterno’s demands on joining SWU had been a new stadium. With attendance increasing, SWU administrators began to face the issue head-on. After 6 months of study, much political arm wrestling, and some serious financial analysis, Dr. Joel Wisner, president of Southwestern University, had reached a decision to expand the capacity at its on-campus stadium. Adding thousands of seats, including dozens of luxury skyboxes, would not please everyone. The influential Pitterno had argued the need for a first-class stadium, one with built-in dormitory rooms for his players and a palatial office appropriate for the coach of a future NCAA champion team. But the decision was made, and everyone, including the coach, would learn to live with it. The job now was to get construction going immediately after the 2007 season...

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