ation of hidden expenses and phantom revenue to inflate earnings by billions of dollars to perpetuate the illusion that WorldCom was a viable company. When the truth finally emerged, the stock went into a slow-motion collapse costing investors about $180 billion and resulting in a bankruptcy filing (Kadlec, Tsiantar, Kiviat, Jackson, 2004, 66).
John Weinberg in Economic Quarterly (2003) notes that many decisions in accounting involve rules that cannot be broken. Over the last several years, Enron and a number of publicly traded corporations have broken many of these rules. In doing so, they have committed accounting fraud and ultimately have been forced into bankruptcy protection. These bankruptcies have resulted in the loss of tens of thousands of job, and wiped out hundreds of billions of dollars in stock value. These bankruptcies have wiped out the life savings of numerous investors, former employees and retirees. The bankruptcy filings called into question the effectiveness of the U.S. Securities and Exchange Commission's oversight of public
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