WORLDCOM‚ INC: CORPORATE BOND ISSUANCE Introduction This case raises many interesting questions concerning the record setting issuance of corporate debt by WorldCom‚ Inc. (“WorldCom”). Both the surprisingly voluminous structure of the proposed issuance and the foreboding macro-economic climate in which it was slated spark concerns over the risk and cost of the move. One of the first questions that must be addressed is whether WorldCom’s timing was appropriate. Next‚ the company’s choice of
Premium Bond Finance Bonds
WORLDCOM‚ INC: CORPORATE BOND ISSUANCE 1. IS IT A GOOD TIME FOR WORLDCOM‚ INC. TO ISSUE? CONSIDER FACTORS IN FAVOR AND FACTORS THAT ARE NOT IN FAVOR. Personally I believe that the time is not in favor of WorldCom in undertaking one of the largest bond issues at the time. Even though there are many advantages with proceeding with the issue‚ I believe that the degree and the uncertainty raised by some of the disadvantages outweigh the advantages of going ahead with the $6Billion
Premium Management Stock Balance sheet
Tutorial 2 Q1. Why do most international bonds have high Moody’s or Standard & Poor’s credit ratings? Credit Rating is a social intermediary service to provide credit information and reference for the community. Credit rating is aim to show the size of a credit default risk the rating object‚ rating agencies focus on financial conditions and historical data to give the overall valuation of object. Currently‚ credit rating on the issue of international bonds is the popular investment risk valuation
Premium Bond Credit rating Debt
The role of Eurodollar bond issuance in Emerging Markets Eurodollar bonds are U.S. dollars held in banks outside the United States by a non US organization. They pay interest and principal in Eurodollars. These bonds are not registered with the Securities and Exchange Commission. Due to fewer regulatory restrictions and costs in the Euromarkets‚ Eurodollar bonds can be sold at lower than U.S. interest rates. Eurodollar bonds are one of the more common Eurocurrency bonds because of the international
Premium United States dollar Monetary policy Futures contract
WorldCom Ethical Scandal In the late 1990’s‚ WorldCom was a successful company and leader in the telecommunications world. They had merged with MCI and the company was regarded for being innovative and growth hungry. However‚ in the midst of all the mergers WorldCom CEO Bernard Ebberly began to mismanage the company. WorldCom was no longer meeting their numbers and it looked like stock prices would fall. Rather than letting this happen‚ executives at WorldCom doctored the books. CFO Scott
Premium Fraud
Concepts a. (i.) According to FASB Statement of Concepts No. 6‚ paragraph 25‚ assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. They represent probable future economic benefits controlled by the enterprise. According to FASB Statement of Concepts No 6‚ paragraph 80‚ expenses are outflows or other using up of assets or incurrences of liabilities (or a combination of both) during a period from delivering or producing
Premium Depreciation Generally Accepted Accounting Principles Asset
Q 1 Explain the nature of accounting fraud? A1. Background: The origin of WorldCom can be traced to the breakup of AT&T in 1983. The company began as Long Distance Discount Services Inc during 1983. LDD name was changed to WorldCom in 1995. To build the economies of scale that were critical success factor in long distance market it was imperative for WorldCom to grow its available volume off bandwidth as it lowered the per unit costs. Also the Telecommunication act of 1996 permitted long
Premium Fraud Accounting scandals Generally Accepted Accounting Principles
Accounting Fraud at WolrdCom Introduction WorldCom‚ US second largest telecommunication company shocked the world by filing bankruptcy at 21 July 2002. The WorldCom filing surpassed Enron and became the largest bankruptcy filing in United States history. Due to its rapid growth‚ WorldCom is also heavily in debt as they finance the company growth with debt. The collapse of WorldCom did not just affect their employees‚ retailers‚ the government but also bankers. WorldCom was a multi-billion dollar telecommunications
Premium Board of directors Corporate governance Fraud
7/22/13 WorldCom Search » Ethics Home Page About the Center Focus Areas Bioethics Business Ethics Campus Ethics Character Education Government Ethics Internet Ethics More... Publications Ethics Articles Ethics Cases Ethical Decision Making Videos Ethics Blogs Podcasts E-letter/Subscribe Contact Us Site Index WorldCom1 By Dennis Moberg (Santa Clara University) and Edward Romar (University of MassachusettsBoston) An update for this case is available. 2002 saw an unprecedented number of
Premium Stock Stock market
CASE NAME: WorldCom: Keeping Planes In the Air 1. Briefly describe the important aspects of the situation. WorldCom had asked its accountant to make accounting entries dipping into reserves to help the company to meet its earnings target. WorldCom had been done these financial reserves for three quarters and intended to do so thereafter. The telecommunications industry was in a severe slump. WorldCom had a slow growth and rising cost. Vinson‚ who had done WorldCom’s accounting
Premium Ethics Bookkeeping Accountant