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Examining a Business Failure
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Research a failure that occurred at a large organization such as WorldCom. Describe how specific organizational behavior theories could have predicted or can explain the failure of the company. Compare and contrast the contributions of leadership, management, and organizational structures to the organizational failure. must include cited references from appropriate sources (text chapters, professional journal articles) that apply and develop relevant concepts.
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WorldCom scandal was one of the biggest accounting scandals of American corporate history. WorldCom was a U.S based telecommunication company. The WorldCom accounting scandal was disclosed in 2002. The Company had resorted to fraudulent accounting practices for five quarters (four quarters of 2001 and the first quarter of 2002) (The WorldCom Accounting Scandal, 2002). The well-known telecommunication company WorldCom and the accounting, auditing and consultancy enterprise were involved in this big accounting fraud. The corporate scandal of WorldCom ultimately headed the company towards the disgrace that ensued in the biggest bankruptcy in American history.
After this act company terminated the service of the top executive including Scott Sullivan (Sullivan), the Chief Financial Officer and David Myers, the Senior Vice President and Controller. The main entity accused of this fraud in the company was the Arthur Anderson WorldCom auditor. The company auditors did the fraud and held Sullivan responsible for this fraud. Sullivan was arrested on charges of frauds and misrepresentation of the accounts. The Arthur main accused of fraud was washing their hand by fired the fact of fraud. He was creating the facts, which shows that he was not aware about the accounting discrepancies (The WorldCom Accounting Scandal, 2002).
The auditor made the hole of $4 billion in balance sheet of the company, which created the financial crisis for WorldCom. For overcoming from the financial crunch company lay off 17000 workers, which was the 20% workforce of company. When the conduct fell through, WorldCom charged for bankruptcy on July 2002 under chapter 13 of the bankruptcy code. In 2002 the WorldCom’s balance sheet represented the $9 million hole (WorldCom scandal: Lessons for corporate America).
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