...Mohamed A. Hassan Ph.d Research Scholar What was up with Wall Street? The Goldman Sachs Standards and Shades of Gray Abstract This paper discusses the business ethics in the organization through the examination of ethical practices conducted at Goldman Sachs Inc. The paper includes a list of all the actions executed by Goldman Sachs Inc which are defined in this paper as gray area practices. The paper also presents an ethical analysis of these gray area actions as well as all the parties that were affected by the Goldman Sachs practices. Business Ethics The problem to be investigated is business ethics through the examination of ethical practices conducted by Goldman Sachs Inc and ethical gray areas which are situations and problems that don’t fit neatly into any existing mode of ethical analysis within the business (Marshall, 2007). Business ethics are very important to inspire the employees and attract more wanting to work for the business. Business ethics are also important because if the business lacks good ethics, this can damage the business reputation and make it less appealing to stakeholders and that will lead to profit loss affect the whole business. Ethics of business has been discussed by Peter Drucker (Drucker, 1986, p. 254) which he said “The problem is one of moral values and moral education, of the individual, of the family, of the school. But there neither is a separate ethics of business, nor is one needed”. Drucker’s interpretation of business ethics...
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...Fraud on WSJ: A Case Study of Goldman Sachs Case The secret of great returns which are difficult to explain is a crime that has not yet been discovered because it has been carefully executed - Pere Goriot Goldman Sachs and Paulson Co. Inc.: The Players. The Goldman Sachs Group, Inc. is a global investment banking and securities firm which engages in investment banking, securities, investment management, and other financial services primarily with institutional clients. Goldman Sachs was founded in 1869 and is headquartered at 200 West Street in the Lower Manhattan area of New York City. The firm has offices in major international financial centers and provides mergers and acquisitions advice, underwriting services, asset management, and prime brokerage to its clients, which include corporations, governments and individuals. The firm also engages in proprietary trading and private equity deals and is a primary dealer in the United States Treasury security market. On September 21, 2008, Goldman Sachs and Morgan Stanley, the last two major investment banks in the United States, both confirmed that they would become traditional bank holding companies, bringing an end to the era of investment banking on Wall Street. Despite the 2007 subprime mortgage crisis, Goldman was able to profit from the collapse in subprime mortgage bonds in the summer of 2007 by short-selling subprime mortgage-backed securities. The firm initially avoided large subprime write downs, and achieved a...
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...Abstract This paper discusses the business ethics in the organization through the examination of ethical practices conducted at Goldman Sachs Inc. The paper includes a list of all the actions executed by Goldman Sachs Inc which are defined in this paper as gray area practices. The paper also presents an ethical analysis of these gray area actions as well as all the parties that were affected by the Goldman Sachs practices. Business Ethics The problem to be investigated is business ethics through the examination of ethical practices conducted by Goldman Sachs Inc and ethical gray areas which are situations and problems that don’t fit neatly into any existing mode of ethical analysis within the business (Marshall, 2007). Business ethics are very important to inspire the employees and attract more wanting to work for the business. Business ethics are also important because if the business lacks good ethics, this can damage the business reputation and make it less appealing to stakeholders and that will lead to profit loss affect the whole business. Ethics of business has been discussed by Peter Drucker (Drucker, 1986, p. 254) which he said “The problem is one of moral values and moral education, of the individual, of the family, of the school. But there neither is a separate ethics of business, nor is one needed”. Drucker’s interpretation of business ethics is that personal ethics and business ethics cannot be separated and he gave an example of businessmen should not cheat...
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...1.0 Introduction: What is Organisational behaviour? According to Stephen P and Timothy A (2007), Organizational Behaviour is the study which enables an organisation to examine the impact of individual, groups and structure’s behaviour within an organisation. The implementation of such knowledge will eventually improve an organisation’s effectiveness. Organizational behaviour is a field of study and this study is actually concerned about three determinants of behaviour in an organization. Which are : • • • Individual Groups Structure Moreover organizational behaviour helps manager to gain knowledge about Individual, Groups and the effect of structure on behaviour and to apply that knowledge into practice. Organizational Behaviour encompasses a wide range of topics. Although there is still some dispute regarding the importance of each topics, there appears to be general agreement that OB includes the core topics of motivation, leader behaviour and power, inter-personal communication, group structure and processes, conflict, work design and work stress. From the above discussion, it can be said that OB is concerned with the study and understanding of individual and group behaviour in an organization and how their behaviour influence the overall performance of an organization. 1 1.1 Objective: This report is created as an academic requirement of the “Organisational Behaviour” course. It has been prepared to meet the requirement of formal report preparation part that demands...
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...Business Research Ethics Paper Wayne Bell University of Phoenix RES/351 Business Research Robert Caldwell July 24, 2015 The Goldman Sachs Case When we think of the word ethics, we think of rules and regulations to keep us honest or to know the difference between right and wrong. Another way of defining ‘ethics’ focuses on the disciplines that study standards of conduct, such as philosophy, theology, law, psychology, or sociology” (Resnik, 2011). Considered by many economists to be the worst financial crisis since the Great Depression, the financial crisis of 2007 was primarily due to the collapse of the housing industries subprime mortgage market. Residential mortgage-backed securities are commonly issued bonds that are backed by thousands of residential real estate mortgages. The Goldman Sachs case was comprised of subprime mortgages. Most business organization possess a mission statement, a code of ethics or rules to follow to be able to limit the ethical issues that may arise within the Institution, Goldman Sachs did not have any of these. In exploring ethical behavior in the banking and financial institutions whose sole existent is to increase profits through the sale of consumer loans. In 2005, the banking industry started issuing subprime mortgage loans to consumers regardless of their income qualification. “The collapse in prices precipitated the collapse in banking profits, prompting a call...
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...9-406-002 REV: MARCH 22, 2007 BORIS GROYSBERG SCOTT SNOOK Leadership Development at Goldman Sachs Our people have driven Goldman Sachs’ success for 130 years through sustained, superb execution across a range of markets and products. The best way to maintain that advantage is by recruiting, training and mentoring people as we always have—one at a time, with great care. We want Goldman Sachs to be a magnet for the very best people in the world—from new graduates to senior hires. At the same time, we are focusing on developing our very deep bench of talented people and improving and extending our skills. We are, for instance, placing young leaders in demanding positions that stretch their abilities. We are also devoting more time and attention to the formal training and development of leaders, particularly senior leaders. — Henry M. Paulson, “Letter to Shareholders,” Goldman Sachs, 1999 Annual Report Late on the evening of November 7, 1999, a small cadre of senior leaders huddled around a conference table on the 22nd floor of 85 Broad Street, deep in the heart of New York City’s financial district. The heady atmosphere and high-octane blend of intensity, anticipation, and quiet professionalism were not unusual for one of the world’s most storied investment banks. Tonight, however, eleven of Goldman Sachs’ finest were working not on a major acquisition or IPO, but on a revolutionary leadership development plan for the firm. In June 1999, Goldman’s Management...
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...Gray: The Goldman Sachs Standard Are there ethics in big business? Or does big business answer to a different power? This can be a rather gray area. The problem to be investigated is the Goldman Sachs Standard and the ethics (or lack thereof) that exist in the company. The original market strategy was to provide loans for small businesses and then sell these loans as commercial paper. (Jennings, 2012) In the 1920s, this became a tough market in which to make a profit. So, to borrow a phrase, when the going gets tough, the tough change strategies. In the late 1920s, Goldman changed its investment strategy to layered investments. This strategy involves creating a company and then personally purchasing a large amount of the shares. Goldman would generally purchase approximately 90 percent of these shares. The public, unaware of the original purchase, only saw a profitable company so they eagerly purchased not only the remaining initial shares, but also purchased shares sold by Goldman at a higher rate. Goldman would also purchase some of these to artificially inflate the market even further. This enabled Goldman to make money off of the secondary sales. Goldman was lying to its clients because the company it created was not truly as profitable as the inflated share price would indicate. It was fully aware of this and continued to layer additional companies into the strategy that would appear successful only as long as the market continued to grow. Goldman was lying...
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...11/12/2009 MANAGEMENT 573 GOLDMAN SACHS CASE STUDY Brady Gear, Adam Heying, Maxwell Kagan, Kelly Schilling, & Joseph Quinn Wingerd Table of Contents Introduction .................................................................................................................................................. 4 History ........................................................................................................................................................... 4 The Nineteenth Century ............................................................................................................................ 4 The Twentieth Century .............................................................................................................................. 5 More Recent Times ................................................................................................................................... 6 Who’s Who List of Former Goldman Sachs Executives ................................................................................ 7 Business Segments ........................................................................................................................................ 9 Investment Banking ................................................................................................................................ 10 Financial Advisory ............................................................................................................
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...Melisa Schellhamer, April 13, 2010 Melisa Schellhamer, April 13, 2010 SEC files a fraud case against Goldman Sachs, an industry leader, is now being investigated for unfair investing scandal. SEC files a fraud case against Goldman Sachs, an industry leader, is now being investigated for unfair investing scandal. Goldman Sach’s Case # 5 AC805 Advanced Management Accounting Control Systems Goldman Sach’s Case # 5 AC805 Advanced Management Accounting Control Systems The Goldman Sachs fraud case opened by the Securities and Exchange is one of the items that were highlighted by the down turn of the economy in the last few years. Goldman Sachs has vigorously denied any wrongdoing, but the case against them seems fairly tight if the information currently provided is accurate. At the center of all of this Fabrice Tourre. Tourre is an employee of Goldman Sachs that has been charged with fraud. The nature of the charge is that as an employee of Goldman Sachs he helped create a Collateralized Debt Obligation (CDO) that was not disclosed to potential investors. More damning than anything however that seized email correspondence is seems to point to the fact that he was fully aware of what he was doing. How this all ties in is that a CDO is an investment vehicle whose performance is directly related to a set of assets. In regards to this case the CDO was a family of securities that were backed by subprime residential mortgages. As this is considered risky...
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...Portfolio Strategy Portfolio Strategy This paper will focus on 23 global emerging markets studied by Goldman Sachs Investment Research. In this paper I will revise the initial portfolio strategy from 1999 that touched on long-term perspective on short term risk. The emerging countries are within Asia, Latin America, Eastern Europe, and Middle East. The information the company provided was strictly based on a predicted study of future outcomes based on emerging markets. The paper of itself does not issue a company strategy on how to use the information found. In this paper I will use scenarios the company presents and determine how Goldman Sachs should invest 5 million dollars recently received to maximize its wealth. In the overview Goldman Sachs mentioned: That they developed a model of discount rate determination that permits the company to recreate discount rate history and calculate discount rates for 23 emerging markets over the last 25 years. The comparison of current discount rates versus their long-term trend has powerful investment implications and turns the investment decision on its head. Abnormally high discount rates relative to history (normally interpreted as punishing cash flows) may be a buy signal, while abnormally low rates may be a sell signal. Current emerging market discount rates are approximately in line with their five-year moving average. From purely a risk perspective, Asian markets appear undervalued, while Latin America and EMEA...
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...Turkey, Mexico, Indonesia and Nigeria, are seen as the most likely contenders to the BRICs. Some other developing countries that have not yet reached the N-11 economic level, such as South Africa, aspire to BRIC status. Economists at the Reuters 2011 Investment Outlook Summit, held on 6–7 December 2010, dismissed the notion of South Africa joining BRIC.[6] Jim O'Neill told the summit that he was constantly being lobbied about BRIC status by various countries. He said that South Africa, at a population of under 50 million people, was just too small an economy to join the BRIC ranks.[7] However, after the BRIC countries formed a political organization among themselves, they later expanded to include South Africa, becoming the BRICS.[8] Goldman Sachs has argued that, since the four BRIC countries...
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...Introduction “Competition in the 21st century's global economy will be complex, challenging, and filled with competitive opportunities and threats.” (Ireland & Hitt 2005, p. 63) In Ireland and Hitt’s paper, they discussed that today’s organizations are undergoing a challenging environment which is competitive and filled with changes. In order to improve the performance and success in this environment, organizations would need effective strategic leadership. It has also found that in the last few years, there have been explicit contributions from researches which help the managers to adapt today’s business environment by understanding and implementing the strategic leadership (Mary et al, 2008). This paper will discuss strategic leadership by introducing the definition of the strategic leadership as a start. The paper will then analyse what does the strategic leadership mean to the organizations and explain why organizations need strategic leadership in three angles: the change of business environment; the inadequacy of traditional management role for organizations; the importance of strategic leadership in terms of organizations’ strategy implementation. Furthermore, this paper will discuss three implications that the strategic leadership could bring to organizations from the perspectives of: stakeholder, business culture and globalization, respectively. The paper will also give examples for each implication to illustrate why organizations would be benefit from good strategic...
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...Global Macro Research Top of Mind November 13, 2014 Issue 29 Is Europe the Next Japan? From the editor: A slowdown in Euro area growth momentum from an already anemic pace, combined with ongoing concerns about deflation risks, has made comparisons with Japan’s so-called “lost decades” Top of Mind. We ask three experts whether the Euro area is set to repeat Japan’s prolonged period of stagnation and deflation: former BOJ Governor Masaaki Shirakawa (unclear, but Euro area recovery requires addressing the underlying problem of economic integration and not its symptom, deflation), GS Chief European Economist Huw Pill (low growth and even some deflation similar to Japan, in terms of outcome if not in terms of causes, are likely in the short term, but – also akin to Japan – a deflationary spiral is not), and LSE Professor Paul De Grauwe (there is a real risk of this outcome or worse unless policies change). We conclude that Euro area economies and assets could escape Japan’s fate but warn that Euro area stagnation would have a greater impact on the global economy than did Japan’s. Inside Interview with Masaaki Shirakawa Former Governor of the Bank of Japan 4 Headed for Japanese-style deflation? Silvia Ardagna, GS Rates Strategy 6 Interview with Huw Pill GS Chief European Economist 8 Euro area stagnation and its discontents Jose Ursua, GS Global Economics Research 10 Interview with Paul De Grauwe Professor, London School of Economics ...
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...Global Economics Paper No: 192 Goldman Sachs Global Economics, Commodities and Strategy Research at https://360.gs.com The Long-Term Outlook for the BRICs and N-11 Post Crisis The BRIC and N-11 countries are emerging from the crisis better than the developed world. As a result, our long-term projections for the BRICs look more, rather than less, likely to be realised. It is now possible that China will become as big as the US by 2027, and the BRICs as big as the G7 by 2032. Within the BRICs and N-11, China, Brazil, India, Indonesia and the Philippines appear to be performing best. Bangladesh, Egypt, Korea, Nigeria, Turkey and Vietnam form a second group of countries that have performed broadly in line with expectations. Iran, Mexico, Pakistan and Russia have need for improvement. We show the ongoing dramatic BRIC influence in key product markets, with autos and crude oil as examples. Important disclosures appear at the back of this document Thanks to Dominic Wilson, Michael Buchanan, Paulo Leme and Swarnali Ahmed for their valuable comments, and to Alex Kelston for the Growth Environment Scores Jim O’Neill and Anna Stupnytska December 4, 2009 Goldman Sachs Global Economics, Commodities and Strategy Research Global Economics Paper Contents Summary Section 1. Where We Stand on the BRICs and N-11 Section 2. The BRICs and N-11 in the Aftermath of the Crisis 2.1 BRICs and N-11 Global Importance Continues to Rise 3 4 6 6 Higher growth contribution...
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...2753/JEI0021-3624450213 Banking Ethics and the Goldman Rule John P. Watkins Abstract: Insulating people from the effects of the crisis has left intact the habits of thought and the basic institutional structure. The continued reign of pecuniary values leaves intact the Goldman Rule: pursue profitable opportunities regardless the effects on others. Within a culture dominated by pecuniary values, profitable opportunities present a coercive force. Laissez-faire policies allow profitable pursuits without restraint. Subprime mortgages offered an opportunity to tap a new source of profits, namely, the increase in housing prices. Many financial institutions engaged in unscrupulous actions to convert household wealth into corporate profits. Efforts to reign in the industry remain wanting. Keywords: acquisitive society, banking ethics, banking profits, Goldman Sachs, subprime crisis JEL Classification Codes: A13, B25, B26, D63 The bailout of the banks violates the legitimacy of markets, the ethos that profit represents the reward for success, loss the punishment for failure. The outrage over bailouts combined with insulating people from the effects of the crisis has fostered an anti-interventionist reaction and a resurgence of neoliberalism. Insulating people from the effects of the crisis has largely left intact the habits of thought and the basic institutional structure. The continued reign of pecuniary values leaves intact the Goldman Rule: pursue profitable opportunities regardless...
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