Effect of Unethical Behavior Article Analysis

Effect of Unethical Behavior Article Analysis

PLEASE DO NOT COPY.

By

Stain BABA

ACC/291

Instructor

Due Date

Effect of Unethical Behavior Article Analysis

The desperation by individuals and organizations to achieve results at all cost coupled with a host of other factors have managed to create an environment where unethical practices and behaviors seem to thrive. To the same degree, there has been concerted effort to counter the seemingly increasing problem of unethical practices and behavior at least since the widely publicized cases of Enron and WorldCom. Unethical practices can be perpetuated by a company as a whole or by a select few of its employees and can range from using improper accounting processes to inflate revenue or hide losses, stealing, bribery and insider trading. However, the effects are quite disastrous not just for the company but for its employees and investors.

Situations abound that may lead to unethical practices and behavior, opportunity for fraud may lure employees and senior executives of a company into unethical conducts. Other situations include; poor supervision, lack of adequate internal controls, poor documentation, collusion among employees, ineffective regulation by relevant authorities and weak ethical structure within the organization. One or a combination of any of these situations can lead to the committal of an unethical conduct.

The Case of WorldCom

WorldCom prior to its filing for bankruptcy protection in 2002 was one of the largest long distance telephone companies in the United States. A slowdown in the telecommunications industry coupled with the company's failed attempt to merge with Sprint left WorldCom share price taking a slide and this heralded the scandal that became widely publicized. The major unethical practice in the case of WorldCom is the use of fraudulent accounting methods to cover up decreasing earnings in a bid to maintain the stock price of the company (Beresford, Katzenbach & Rogers, 2003). According to Beresford et al. (2003), the fraud at WorldCom was accomplished by recording certain costs as capital expenditure instead of expenses and the inflation of revenues with fictitious accounting entries. This revelations prompted investigations into the accounts of the company and it was discovered that billions of dollars could not be accounted for. At the end of 2003, it was estimated that the total assets of the company had been inflated by $11 billion. As expected, the fraudulent dealings at WorldCom affected its employees through mass layoffs, its investors and the business community at large just as any other