Lost insurance benefits as well as retirement benefits...

Lost insurance benefits as well as retirement benefits tied to WorldCom stock. Shareholders, which included many pension funds, lost billions of dollars. The California public-employee’s retirement system, the largest state pension fund in the country, sued in an attempt to regain some of the $580 million it lost in the WorldCom debacle (Ripley 6). The telecommunications industry suffered as well. Industry companies were competing against WorldCom under false pretenses. WorldCom was fraudulently stating its financials and its competition could not possibly be aware of WorldCom’s true expenses. As a result, competing companies were forced to make decisions to keep in line with WorldCom’s reported growth. ATT fired tens of thousands of†¦show more content†¦Executives took expenses and turned them into assets. Just as simple as the fraud was so were the pressures, opportunity and rationalization behind the scheme. Perceived Pressure In 1997, while being interviewed by a Fortune Magazine reported, Bernie Ebbers stated, â€Å"Our goal is not to capture market share or be global. Our goal is to be the No. 1 stock on Wall Street† (Charan, Useem and Harrington 3) As a result of its CEO’s ambition, WorldCom employees felt pressure from their â€Å"powerful leader† to perform up to Ebbers’ ambitious goals and not wanting to disappoint. As the flooded telecommunications industry started to suffer,so did WorldCom. Pressure began to mount for its CEO as Bernie Ebbers had not only a professional stake in the company but an enormous personal financial stake as well. As the industry put pressure on Ebbers, the CEO put pressure on the top executives of the company. Perceived Opportunity The opportunity for the accounting fraud was created by Bernie Ebbers by way of his management style. As previously stated, Ebbers was able to attract admirers to the Board of Directors and his management team. Ebbers was a â€Å"powerful leader† responsible for creating a culture in which he and Scott Sullivan were not to be questioned. The Board of Directors and the Human Resources did not want to have to confront Ebbers. As a result, Ebbers went unchecked and was able to do as he pleased. If Ebbers wanted numbers met, hisShow MoreRelatedTen Ways To Create Sharholders Value Alfred Rappaport8372 Words   |  34 PagesA R T I C L E www.hbr.org Ten Ways to Create Shareholder Value by Alfred Rappaport Included with this full-text Harvard Business Review article: 1 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work 2 Ten Ways to Create Shareholder Value 13 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications Product 1069 This article is made available to you by Al Rappaport. 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