When a company shuts down because of executive fraud, “most employees have no idea of the risks until the very day they lose their jobs,” says Stanford GSB accounting professor Jungho Choi
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In June of 2002, the telecommunications firm WorldCom confessed to a $4 billion accounting scandal. One month later, the company declared bankruptcy. As is routine after such public implosions, a spotlight shined on top management. The CFO received a five-year prison sentence, the CEO a 25-year sentence. The scandal became a case study in executive malfeasance.
But for Jungho Choi, assistant professor of accounting at Stanford GSB, a different narrative remained unvoiced: What about the nearly 30,000 employees who lost their jobs — including 17,000 in one day? He wondered the same thing about workers at Enron and Waste Management, Xerox and Tyco.
“ Workers usually suffer more than management, but they’re hard to trace, and this made me want to understand what happens to them.
Jungho Choi
This piece originally appeared in Stanford Business Insights from Stanford Graduate School of Business. To receive business ideas and insights from Stanford GSB click here: (To sign up : https://www.gsb.stanford.edu/insights/about/emails ) ]