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Case Study

WorldCom: The downfall of a giant

By Stewart Hamilton and Alicia Micklethwait

25 pages

September 2004

Reference: IMD-1-0214

WorldCom was a product of deregulation of the telecoms industry; in less than 20 years it had become America’s 2nd largest long-distance carrier and the world’s largest Internet carrier. Driven by Ebbers and Sullivan (WorldComs’s CEO and CFO), its acquisition fuelled growth was financed by an ever rising share price. A complacent Board rubber stamped Ebbers’ decisions and even allowed him to borrow more than $400 million of company funds with very limited security. Finding it difficult, especially after the collapse of the Internet boom, to sustain the market’s expectations of growth, WorldCom started to manipulate its figures. Internal auditors eventually uncovered the $11 billion fraud triggering America’s biggest bankruptcy.

Keywords

Accounting, Corporate Collapse, Fraud, Strategic Planning

Settings

World/global
Services, Telecommunications
2002

Type

Published Sources

Available Languages

English

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