StudentShare solutions
Triangle menu

Corporate governance - Essay Example

Not dowloaded yet

Extract of sample
Corporate governance

The Fraud was first discovered when its budget and financial Analyst Kim Emigh blew the whistle in December of 2000 when he asked engineers in Richardson, Texas unit and elsewhere to stop charging their time for long term projects to capital expenditures (Young 2002). It was also when he told his accounting manager Frank Guckes after receiving an email to charge it to another account that it is fraud and that it is a SEC violation that he should make everybody aware of it because Kim Emigh will (Young 2002). Ten weeks later, Kim Emigh was fired which prompted him to sue WorldCom leading to a congressional and SEC inquiry which eventually led to WorldCom’s filing for Chapter 11 bankruptcy protection in July 21, 2002. Later, its CEO Bernard Ebbers was found guilty on March 15, 2005 and was sentenced to 25 years in prison. WorldCom’s other officials such as its CFO Scott Sullivan, former controller David Myers, former accounting director Buford Yates and former accounting managers Betty Vinson and Troy Normand all plead guilty to fraud, conspiracy and filing of false statements. II. Crisis as a pretext of WorldCom corporate governance failure The WorldCom financial scandal came about from the backdrop of several crises that put pressure on the liquidity of the company that may have triggered its shady accounting practice. Beginning in late 1990s, the telecom industry was already beginning slow down and the Argentinian bank crisis in 2001 prompted bank to adopt a conservative fiscal policy by increasing its interest rates. This has affected the dotcom companies whose rapid appreciation in the market was propelled mainly by cheap capital afforded by lower interest rates. When the dotcom bubble burst, it contributed to the slowdown of the telecoms industry of which WorldCom is a player. The increasing conservatism of banks led them to pressure WorldCom CEO Bernard Ebbers to cover margin calls of his declining WorldCom stock because it was used to finance his other businesses. In 2001, Ebbers urged the board of WorldCom to provide him $400 to cover these margin calls whose strategy did not work. This added pressure to the finances of the company to resort to shady accounting practices to cover its deteriorating financial position and save the value of its stocks so as not to add to the margin calls it has to cover. III. Corporate government failures of WorldCom WorldCom’s problem started when its CEO Bernard Ebbers used WorldCom stocks to guarantee his loan from banks that will finance his other businesses. As a business practice, it is not ideal to juggle funds between companies because they do not only confuse the accounting of both companies but also brings other financial complications not to mention unethical such as what happened to WorldCom. When the series of crisis begun in late 1990’s which was triggered by a multitude of factors such as bank crisis, dotcom burst and Enron scandal, its stocks depreciated because of industry slowdown that can be attributed to the dire macroeconomic condition during that time and the inappropriateness of juggling its funds by Bernard Ebbers was highlighted and sired many problems in the company. This also put pressure on the finances of WorldCom that instead of restructuring itself as part of good corporate governa ...Show more

Summary

Name Professor Class Date Corporate governance: WorldCom I. Introduction If one will talk about how the failure of corporate governance resulted to fraud that led a company to its collapse, the case of Worldcom is one of the classic cases. The company practiced shady accounting methods to hide its deteriorating financial condition and falsely reported growth and profitability for the value of its stock price to increase…
Author : auerskyla
Corporate governance essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Corporate governance"
with a personal 20% discount.
Grab the best paper

Related Essays

Corporate governance
Companies in recent years started giving greater emphasis on effective governance with a view to ensure competitive position, attract sufficient capital, guarantee sustainability, and combat corruptions. Corporate governance practices are associated with the development of financial markets, because higher level of governance in most countries are related to larger securities markets and lower costs of external finance (Tang and Wang, 2011, 47).
3 pages (750 words) Essay
Corporate governance
The interests of various stakeholders and shareholders were compromised by the vested interests. Roberts, McNulty and Stiles (2005) have emphasized the importance of board members of the company who are endowed with huge powers that could be easily misused.
5 pages (1250 words) Essay
Corporate governance
With respect to this, it ensures that the business is conducted in accordance to ethics. Such principles should be adhered to in the decision making process while giving the right honors to the laws of the land. Fundamentally, people develop a lot of confidence and would wish to be associated with an organization that is perceived to be practicing good corporate governance.
6 pages (1500 words) Essay
Corporate Governance
According to the report corporate governance board in an organization operates via the different members of board of directors that usually make decisions, regulations, rules, laws and legislations for their firm, employees and suppliers; these corporate governance rules actually provide the path on which the firm has to move.
16 pages (4000 words) Essay
CORPORATE GOVERNANCE
The introduction section gives general principles and concepts about corporate governance. The main body of the paper carries out a comparison of the UK and the US corporate governance models. It is divided into
10 pages (2500 words) Essay
Corporate Governance
Nonetheless, these controls may add the scope for abuse and managerial discretion. This paper is an integrative essay that looks at corporate governance from the perspective of two separate articles. In the
2 pages (500 words) Essay
Corporate governance
Corporate governance can be understood through various frameworks of the firm. Agency theory is one of those frameworks, and entails the separation of ownership and control of an organisation. In this case,
8 pages (2000 words) Essay
Corporate governance
The fundamental rationale behind above mentioned fact is the combined endogeneity of accounting systems and governance mechanisms (Brickly and Zimmerman 235-245). According to the
7 pages (1750 words) Essay
Corporate Governance
More importantly, the chapter dwells on the procedures and methodologies that will be involved in working on the paper. 21 Corporate governance in general has become the new crucible in which corporations are tested and declared worthy of the trust of
5 pages (1250 words) Essay
Corporate Governance
Governance refers to the decision-making processes and practices involved in upholding accountability and responsibility of a corporation to its stakeholders. In this context, corporate governance
1 pages (250 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation