Global Corporate Citizenship Case Study

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1. The five stages of global corporate citizenship are elementary, engaged, innovative, integrated, and transforming. Before the housing market burst, Moody’s was in the elementary stage. Managers were unconcerned about the potential adverse impacts their inflated RMBS investment ratings could have on the global financial community. They were indifferent to the concept that millions and even trillions of dollars were invested based on the accuracy of the rating, and that market losses of that size could cause a global recession. The managers did not break any laws by padding the RMBS rating, and they did at some point attempt to warn the marketplace that the RMBS securities were in trouble, but Moody’s did not take the step of being honest …show more content…

Moody’s did not downgrade some of the RMBS packages that they had provided exaggerated rating for until riskiness of the investments had become public knowledge, and they downgraded the investments in efforts to try to protect their reputation. Stage 2 of global corporate citizenship is the engaged stage. Moody’s entered the engaged stage as they started getting negative feedback from customers, the federal government, and from the marketplace, in the form of falling stock prices. As they became aware of the new expectations from the public, the government, and the market, Moody’s held internal meetings, and reviewed their policies and procedures for rating RMBS packages. Moody’s started working with and listening to its stakeholders, including top management and the federal government, in order to stay accredited, and to learn from the mistakes made. In this case, Moody’s does not move to the innovative, integrated and transforming stages of corporate global citizenship. The company did not make any structural changes, or launch any initiatives to provide more assurances, or attempt to make any game changing impacts …show more content…

The millions made by Moody’s employees, and stockholders does not compare to the cost or the amount of money lost by world markets during the financial crisis that was caused in part by Moody’s ratings. 2d. If I was a typical executive in the recent study that found that more than 50% of senior business executive ranked the Golden Rule and the Disclosure rule more highly than other ethical approaches, I would argue that Moody’s was not ethical in this case. They failed in their duty to disclose the bad about the RMBS securities to customers and regulators. Moody’s also failed to treat investors, as they would like to be treated, when Moody’s did not provide good, reliable credit ratings for an investment product that was too complex for the customer to understand themselves.

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