Consider the following statement by a government official. Securities Exchange Commissioner Cynthia Classman included the following in a speech she gave to the American Society of Corporate Secretaries on September 27, 2002:

[T]he distribution of securities by companies that had not made a previous public offering reached the highest level in history. This activity in new issues took place in a climate of general optimism and speculative interest. The public eagerly sought stocks of companies in certain “glamour” industries, especially the electronics industry, in the expectation that they would rise to a substantial premium—an expectation that was often fulfilled. Within a few days or even hours after the initial distribution, these so-called hot issues would be traded at premiums of as much as 300 percent above the original offering price. In many cases the price of a “hot” issue later fell to a fraction of its original offering price.

What impact do you think the psychology of the market had on allowing WorldCom, Mr. Ebbers, and others to engage in creative accounting? Is this a case of “everyone does it”? What layers of ethical issues were involved? Individual? Company? Industry?? p-9687