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.
Highlights
In recent years, consumers have increasingly faced a variety of problems such as poorly built products, failure of companies to honor warranties, deceptive advertising and selling practices, complexity of products, and even dangerous and risky products. Yin et al (2020) as well as Parker (2011) emphasized on the proliferation of this phenomenon in financial and investment firms
To fulfill the goals stated above, this paper will provide a descriptive view of Goldman Sachs, followed by that of the synthetic Collateralized Debt Obligations (CDO) offered by this company
There exist collateralized mortgage obligation (CMO) and collateralized bond obligation (CBO), but CDOs are unique in the sense that they contain different types of debt called tranches or slices, and varying credit risks associated with each slice
Summary
Consumers have increasingly faced a variety of problems such as poorly built products, failure of companies to honor warranties, deceptive advertising and selling practices, complexity of products, and even dangerous and risky products. Yin et al (2020) as well as Parker (2011) emphasized on the proliferation of this phenomenon in financial and investment firms. Yin et al (2020) as well as Parker (2011) emphasized on the proliferation of this phenomenon in financial and investment firms Examples of such practices include the packaging of home mortgage assets into a product called Collateralized Debt Obligations (CDO), and the creation of other derivative products such as the synthetic collateralized debt obligation. To fulfill the goals stated above, this paper will provide a descriptive view of Goldman Sachs, followed by that of the synthetic CDO offered by this company Understanding this derivative product will help understand the making of the financial crisis, the contribution of such product in the overall crisis, and the global impact of the decisions made. The study will analyze the case presented from an ethical standpoint and suggest guidelines and public policies for dealing with similar situations in the future
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
