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AOL/Time Warner and WorldCom:Corporate Governance and the Effects of the Deregulation Paradox
Unformatted Document Text:  2 Abstract In principle, deregulation is suppose to foster competition and thereby open markets to new service providers. The problem, however, is that complete and unfettered deregulation can sometimes create the very problem it was meant to solve; namely, a lack of competition. Researchers like Mosco (1990) call it the "mythology of telecommunications deregulation.” We simply call it the “deregulation paradox.” This paper will consider the direct and indirect consequences of deregulation policy on the performance of two US media and telecommunications companies: AOL/Time Warner and WorldCom. Special attention is given to the deregulation paradox and its effect on corporate governance. A basic argument of this paper is that deregulation in the form of self-regulation can sometimes contribute to a failure of knowledge conditions so that neither a corporate board of directors or its individual members take responsibility (or are fully aware) of the actions of senior management. More specifically, self-regulation failed to provide the objective oversight necessary to ensure the proper execution of business strategy at AOL/Time Warner and failed entirely to prevent egregious forms of corporate misconduct at WorldCom

Authors: Gershon, Richard. and Alhassan, Abubakar.
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Abstract

In principle, deregulation is suppose to foster competition and thereby open markets
to new service providers. The problem, however, is that complete and unfettered
deregulation can sometimes create the very problem it was meant to solve; namely, a
lack of competition. Researchers like Mosco (1990) call it the "mythology of
telecommunications deregulation.” We simply call it the “deregulation paradox.”

This paper will consider the direct and indirect consequences of deregulation policy on
the performance of two US media and telecommunications companies: AOL/Time Warner
and WorldCom. Special attention is given to the deregulation paradox and its effect on
corporate governance. A basic argument of this paper is that deregulation in the form of
self-regulation can sometimes contribute to a failure of knowledge conditions so that neither
a corporate board of directors or its individual members take responsibility (or are fully
aware) of the actions of senior management. More specifically, self-regulation failed to
provide the objective oversight necessary to ensure the proper execution of business
strategy at AOL/Time Warner and failed entirely to prevent egregious forms of corporate
misconduct at WorldCom


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