IDEAS home Printed from https://ideas.repec.org/a/ibn/ibrjnl/v13y2020i6p115.html
   My bibliography  Save this article

Ethical Challenges of Complex Products: Case of Goldman Sachs and the Synthetic Collateralized Debt Obligations

Author

Listed:
  • Franklin M. Lartey

Abstract

In analyzing complex products, this study selected the company Goldman Sachs and one of its product offerings, the synthetic collateralized debt obligation (synthetic CDO). The study later analyzed the ethical implications of providing such a complex product to customers. A review of the literature indicates that researchers identified this product and other associated derivatives of the mortgage backed securities as the main causes of the 2008 financial crisis in the United States of America. As such, Goldman Sachs’ offering of the product posed ethical and moral issues. An analysis of the company and its offering was done under the lenses of various ethical theories such as Kohlberg's theory of moral reasoning, the Kantian ethics, the utilitarian perspective, Friedman’s shareholder theory, the stakeholder theory, the market approach to consumer protection, and the contract view of consumer protection. Besides Friedman’s shareholder theory, all other theories judged the product offering morally wrong and unethical. At the end of the study, the author suggested a contribution to knowledge regarding Kohlberg’s theory of moral reasoning in its application to organizations. The author also suggested further research to validate the outcome of Friedman’s shareholder theory regarding this case.

Suggested Citation

  • Franklin M. Lartey, 2020. "Ethical Challenges of Complex Products: Case of Goldman Sachs and the Synthetic Collateralized Debt Obligations," International Business Research, Canadian Center of Science and Education, vol. 13(6), pages 115-115, June.
    • Handle: RePEc:ibn:ibrjnl:v:13:y:2020:i:6:p:115
    as

    Download full text from publisher

    File URL: http://www.ccsenet.org/journal/index.php/ibr/article/download/0/0/42815/44747
    Download Restriction: no
    File URL: http://www.ccsenet.org/journal/index.php/ibr/article/view/0/42815
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. J. Kaler, 2006. "Evaluating Stakeholder Theory," Journal of Business Ethics, Springer, vol. 69(3), pages 249-268, December.
    2. Weber, James, 1991. "Adapting Kohlberg to Enhance the Assessment of Managers’ Moral Reasoning," Business Ethics Quarterly, Cambridge University Press, vol. 1(3), pages 293-318, July.
    3. Marco Mariotti, 2004. "Inequality aversion, impartiality and utilitarianism," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 22(2), pages 291-304, April.
    4. Jones, Thomas M. & Felps, Will, 2013. "Shareholder Wealth Maximization and Social Welfare: A Utilitarian Critique," Business Ethics Quarterly, Cambridge University Press, vol. 23(2), pages 207-238, April.
    5. Xavier Duran & Patrick McNutt, 2010. "Kantian ethics within transaction cost economics," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 37(10), pages 755-763, August.
    6. Marion S. Mogielnicki, 2011. "Corporate Codes Of Conduct And Business Principles In Light Of The Goldman Sachs Lawsuit Settlement," Review of Business and Finance Studies, The Institute for Business and Finance Research, vol. 2(1), pages 57-68.
    7. Maxwell-Smith, Matthew A. & Barnett White, Tiffany & Loyd, Denise Lewin, 2020. "Does perceived treatment of unfamiliar employees affect consumer brand attitudes? Social dominance ideologies reveal who cares the most and why," Journal of Business Research, Elsevier, vol. 109(C), pages 461-471.
    8. Richard Cebula, 2010. "Bank Failures in Light of the Gramm-Leach-Bliley Act," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 38(4), pages 455-456, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. J. Kaler, 2009. "An Optimally Viable Version of Stakeholder Theory," Journal of Business Ethics, Springer, vol. 86(3), pages 297-312, May.
    2. Yi-Ching Hsieh & Hung-Chang Chiu & Yun-Chia Tang & Wei-Yun Lin, 2018. "Does Raising Value Co-creation Increase All Customers’ Happiness?," Journal of Business Ethics, Springer, vol. 152(4), pages 1053-1067, November.
    3. Feng Xu & Cam Caldwell & Verl Anderson, 2016. "Moral Implications of Leadership - Transformative Insights," International Journal of Business and Social Research, LAR Center Press, vol. 6(3), pages 76-85, March.
    4. Valentinov, Vladislav, 2023. "Stakeholder theory: Toward a classical institutional economics perspective," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 188(1), pages 75-88.
    5. Mariusz Zielinski & Izabela Jonek-Kowalska, 2020. "Profitability of Corporate Social Responsibility Activities from the Perspective of Corporate Social Managers," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 264-280.
    6. Jeffery Smith, 2018. "Efficiency and Ethically Responsible Management," Journal of Business Ethics, Springer, vol. 150(3), pages 603-618, July.
    7. James Weber, 2010. "Assessing the “Tone at the Top”: The Moral Reasoning of CEOs in the Automobile Industry," Journal of Business Ethics, Springer, vol. 92(2), pages 167-182, March.
    8. Andrew West, 2016. "Applying Metaethical and Normative Claims of Moral Relativism to (Shareholder and Stakeholder) Models of Corporate Governance," Journal of Business Ethics, Springer, vol. 135(2), pages 199-215, May.
    9. Eleanor O’Higgins, 2010. "Corporations, Civil Society, and Stakeholders: An Organizational Conceptualization," Journal of Business Ethics, Springer, vol. 94(2), pages 157-176, June.
    10. Premti, Arjan & Jafarinejad, Mohammad & Balani, Henry, 2021. "The impact of the Fourth Anti-Money Laundering Directive on the valuation of EU banks," Research in International Business and Finance, Elsevier, vol. 57(C).
    11. Mariusz Zieliński & Izabela Jonek-Kowalska, 2021. "Does CSR Affect the Profitability and Valuation of Energy Companies? An Example from Poland," Energies, MDPI, vol. 14(12), pages 1-24, June.
    12. James Weber & Elaine McGivern, 2010. "A New Methodological Approach for Studying Moral Reasoning Among Managers in Business Settings," Journal of Business Ethics, Springer, vol. 92(1), pages 149-166, March.
    13. Sophie Bacq & Ruth V. Aguilera, 2022. "Stakeholder Governance for Responsible Innovation: A Theory of Value Creation, Appropriation, and Distribution," Journal of Management Studies, Wiley Blackwell, vol. 59(1), pages 29-60, January.
    14. Ingo Pies & Philipp Schreck & Karl Homann, 2021. "Single-objective versus multi-objective theories of the firm: using a constitutional perspective to resolve an old debate," Review of Managerial Science, Springer, vol. 15(3), pages 779-811, April.
    15. Dominic Martin, 2013. "The Contained-Rivalry Requirement and a ‘Triple Feature’ Program for Business Ethics," Journal of Business Ethics, Springer, vol. 115(1), pages 167-182, June.
    16. Lyu, Chongchong & Yang, Jianjun & Zhang, Feng & Teo, Thompson S.H. & Mu, Tian, 2020. "How do knowledge characteristics affect firm’s knowledge sharing intention in interfirm cooperation? An empirical study," Journal of Business Research, Elsevier, vol. 115(C), pages 48-60.
    17. Pasi Heikkurinen & Jukka Mäkinen, 2018. "Synthesising Corporate Responsibility on Organisational and Societal Levels of Analysis: An Integrative Perspective," Journal of Business Ethics, Springer, vol. 149(3), pages 589-607, May.
    18. C. Chang & Sin-Hui Yen, 2007. "The Effects of Moral Development and Adverse Selection Conditions on Managers’ Project Continuance Decisions: A Study in the Pacific-Rim Region," Journal of Business Ethics, Springer, vol. 76(3), pages 347-360, December.
    19. Ataur Belal & Robin Roberts, 2010. "Stakeholders’ Perceptions of Corporate Social Reporting in Bangladesh," Journal of Business Ethics, Springer, vol. 97(2), pages 311-324, December.
    20. Beatriz Garcia-Ortega & Javier Galan-Cubillo & Blanca de-Miguel-Molina, 2022. "CSR and CEO’s Moral Reasoning in the Automotive Industry in the Era of COVID-19," SAGE Open, , vol. 12(2), pages 21582440221, May.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:ibrjnl:v:13:y:2020:i:6:p:115. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.