The Evolution of Business Regulation: How WorldCom Reshaped Modern Accounting Standards [Honors Keystone]

Authors

• Jackie Gervais, St. John Fisher University

Document Type

Poster Presentation

Publication Date

4-17-2026

Keywords

fsc2026

Abstract

This presentation looks at the rise and fall of WorldCom and the $11 billion fraud that led to the largest bankruptcy in U.S. history at the time. It explains how the company used "improper capitalization" to hide its true costs, specifically by recording everyday operating expenses as assets to make the business look more profitable. Driven by a high-pressure culture from CEO Bernie Ebbers and CFO Scott Sullivan, the company focused on hitting aggressive earnings targets to keep its stock price high. While external auditors failed to catch the fraud, internal auditor Cynthia Cooper eventually exposed it after a secret investigation. In result of this scandal, the Sarbanes-Oxley Act (SOX) was passed to fix corporate reporting and help win back the trust of investors.

Comments

Poster presented at the 2026 Fisher Showcase, St. John Fisher University, April 17, 2026.

Publication Information

Gervais, Jackie, "The Evolution of Business Regulation: How WorldCom Reshaped Modern Accounting Standards [Honors Keystone]" (2026). Fisher Showcase 2026. Paper 212.
https://fisherpub.sjf.edu/fsc2026/212

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