Case Study

THIS IS THE BOOK:

Required Textbook: Competing in Domestic & International Markets (spiral-bound) McGraw-Hill (2011). ISBN-13: 978-1121201576.

Kaplan, R. S., & Kiron, D. (2007). Accounting Fraud at WorldCom (Case Study 9-104-071). Harvard Business School.: http://cb.hbsp.harvard.edu/cb/web/search_results.seam?Ntt=9-104-071&conversationId=366306 - Due by October 27th SaturdayDue by December 10th

Read the case study, Accounting Fraud at WorldCom. .

1. Summarize the ethical dilemmas in the case from the point of view of each of the major actors. What was important to that person or group, and what problems occurred which affected them the most? (Do not simply recite what happened in the case. Analyze and explain why it was a problem, such as policies that were not followed, conflicts of interest for decision-makers, etc.)

2. What decision-making tools or theories from the course do you find the most important, as you think about this case?

The problems at WorldCom, along with other significant corporate cases near the same time, lead to the passage of the Sarbanes-Oxley Act, a Federal law requiring direct responsibility for financial disclosures by senior corporate executives. (See http://www.soxlaw.com/index.htm for a general summary, and http://www.sec.gov/spotlight/sarbanes-oxley.htm for more in-depth information.)

3. Summarize, in your own words, the basic provisions of the Sarbanes-Oxley Act.

4. How might the Sarbanes-Oxley Act have affected the WorldCom case, if it had been in effect earlier?

5. Do you think that regulations such as Sarbanes-Oxley should be necessary? Should corporate and financial executives need to be regulated by these laws, or should we expect higher ethics of the the executives that we put into such senior positions? (Use concepts from the textbook, and any current examples that you can find which are appropriate, to support your answers.)

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