WorldCom: The Accounting Scheme Backfires
In the early 2000s, the telecom industry, which had experienced wild growth since the mid-1980s breakup of AT&T, began to unwind. In response, the management team at WorldCom embarked on a fraudulent scheme to maintain its favored status with investors. Are there other instances in which short-term "good numbers" create long-term problems for financial managers? This case teaches students about the implications of WorldCom's crimes and poses larger questions about truth in accounting.
Case id: 080108
Supplemental Material:
Teaching Slides
Contact us by e-mail at Columbia CaseWorks or 212-854-1796.
Professor Balachandran is interested in performance measurement, corporate governance and valuation. These three subjects are sometimes referred to collectively as shareholder value management. Specifically, he studies how firms use performance measures to align the interests of managers and shareholders and create shareholder value. Balachandran, who has more than 10 years of business experience, is a former management consultant at Ernst & Young and manager at Baxter Healthcare... View Full profile
Professor Sadka joined Columbia Business School in July 2005 and serves as the PhD coordinator of the Accounting Division. Professor Sadka's research focuses primarily on equity valuation. In his research on equity valuation, he examines the role of earnings and earnings predictability in generating stock price volatility and the implications for asset prices. His studies explore issues related to aggregate (market-wide) earnings and aggregate stock price... View Full profile
Personal Website