THE LEGAL ENVIRONMENT OF BUSINESS Essay Example | Topics and Well Written Essays - 1250 words - 2

THE LEGAL ENVIRONMENT OF BUSINESS - Essay Example It made more than 60 acquisitions to become the second biggest long distance company in the U.S. LDDS later became a public company in 1989 after its purchase of advantage companies. WorldCom’s plan was to bring in economies of scale that were desperately needed to become successful in the flourishing telecom market at the time (Monks and Nell 577) (Fernando 218). LDDS then changed its name in May 1995, to WorldCom Inc. Nearly every one of WorldCom’s possessions were paid for by its stock. At first WorldCom was in the voice telephony business, however, novel technology as well as growing competition decreased revenues in addition to profits of the business. WorldCom consequently sought to broaden its horizons in mid-1990 by buying companies that facilitated it venture into data, satellite communications as well as webhosting market among others. Nevertheless, these businesses experienced their own slow down then making it difficult for WorldCom to meet its earnings fore cast as well as its own revenue (Monks and Nell 577) (Fernando 218). Besides being seventy percent better than Enron in terms of assets, WorldCom Inc. was also the second biggest telecommunications company in the United States. ... In June 25, 2002; WorldCom announced that it had deliberately furthermore inappropriately inflated its cash flow by $ 3.8 billion (Brooks and Paul 122) (Fernando 218). The declaration followed the resignation of WorldCom CEO Bernard Ebbers in the midst of questions of his personal loans from WorldCom as we as the launch of SEC’s investigations into WorldCom’s accounting. WorldCom later filed for liquidation protection in July, 2002. A year after rising from bankruptcy protection WorldCom amended its name from MCI to Verizon (Monks and Nell 576). The major personalities embroiled in accounting manipulations at WorldCom include: Bernard J. Ebbers (CEO), Scott D. Sullivan (CFO), Burford Yates (Director general accounting), David F. Myers (Controller), Betty, L. Vinson (Director of management reporting) and Troy M. Normand (Director of legal entity accounting) (Brooks and Paul 122). WorldCom’s financial meltdown took place at the center of the uproar emanating from e vents at the time that can be enumerated as follows: (a) the looming depression of stock markets at the time. (b) Enron’s liquidation in December 2, 2001 as well as the linked senate and congress hearings; plus the fifth amendment by Enron executives. (c) Petitions by president Bush as well as business leaders for reinstatement of trust in addition to reliability to financial markets, reporting as well as corporate governance. (d) Receptive introduction of governance guide lines by Stock and Exchange Commission (SEC). (e) Deliberations by U.S senate as well as congress of separate bills to enhance accountability in corporate governance. (f) Condemnation of Arthur Andersen, auditor of both