Worldcom the Late 1990s and Term Paper

Excerpt from Term Paper :

Other stakeholders were not given a voice to participate in the decision- making discourse. Therefore, the principles that were constructed that allowed the executive financial team to make these decisions led to unethical results.

Statement of Position:

Once reviewing these three ethical concepts and using them to analyze the WorldCom scandal, it becomes clear that the actions of WorldCom were unethical. This was not a matter of simply not understanding the effects their deceitful actions would have, but purposeful deceptive strategies to fool investors and other stakeholders into thinking the company was financially healthier than it truly was.

Arguments in Support of this Position:

The events of the WorldCom scandal will forever be replayed in business and accounting history, along with the variety of other corporate fraud activities recorded in the late 1990s and early 2000s. Common to all ethical concepts is the concept of 'good' (Darwall, 2003). WorldCom's actions held none of this intrinsic good. At first glance, it would appear that WorldCom had operated under a utilitarianism ethical system. The select few who were privy to the deceptive accounting measures being utilized to prop up the organization's stocks and give a picture of a much financially healthier corporation, could easily be mistaken for looking out for their own self-interests. Clearly, an easy assumption to make would be that these individuals were choosing a decision that offered the most utility for themselves. Although this was true in the short-run, in the long-run, it cost them dearly. Not only did their unethical decisions lead to organizational bankruptcy, but it tarnished the company's image as a whole, in the eyes of the general public, as well as added to the distrust that had been building in America of corporations following the variety of other scandals, due to unethical behavior prompted by corporate greed.

Clearly there was no social responsibility considered when making this decision as well. The good of society would have been to provide accurate information regarding the organization's financial health, so that investors made their decisions based on real statistics. The good of society would have been to act in a manner that built trust in the organization and their actions, as opposed to helping facilitate a deathblow to corporate trust across the board.

For the executives involved in the decisions that led to the fraudulent accounting, stakeholders were a means to an end, and held no other value in their eyes other than that.

In addition, there was no open discourse during this decision-making process. Surely if shareholders and other stakeholders had been involved in the process, the fraudulent accounting strategies would not have been implemented. The universal morality that is central to Kantian, utilitarianism and discursive ethics would have come forth and prevented this unethical decision from being made. However, this procedural method was never utilized. Instead, it was a decision made by a limited few who placed their own short-term desires for greed and continued success over the long-term health of the organization and society, in general.


In the end, there is much to be learned from the WorldCom scandal. It is a prime example of unethical behavior driven by greed. Had the financial masters that led the company through these intricate strategies meant for one thing only - deception, applied any of the ethics concepts from: utilitarianism, Kantian, or discursive ethics, a far different decision would've been made. The story would've played out much different, and perhaps WorldCom would've been able to avoid bankruptcy, the shame of the scandal, in general, and may still have existed as a telecommunications industry leader. Instead, due to their ethical blindness, the company will forever go down in history as one of the top infamous corporate scandals of their time.


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Evan, W.M., & Freeman, R.E. (1988) "A stakeholder theory of the modern corporation: Kantian capitalism," in T.L. Beauchamp and N. Bowie (eds.), Ethical Theory and Business (Englewood Cliffs, NJ: Prentice Hall): pp. 75-84.

Harsanyi, J.C. (1953), Cardinal utility in welfare economics and in the theory of risk-taking, Journal of Political Economy, 63, pp. 434-5.

Jeter, L. (2006 Oct 2). Former WorldCom chief begins prison sentence at Louisiana facility. Mississippi Business Journal, 28(40). Retrieved December 4, 2006, from InfoTrac OneFile database.

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