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.
damaged credit, the companies are taking a financial risk by financing them. Considering that for
After the time of financial crisis, JP Morgan was not the only national bank in US which got involved in trade of toxic loans related to mortgage. Before JP Morgan, it was Goldman Sachs-another large US Bank that faced the allegation of manipulating the trades in its own self interes, ended up in favor of SEC while GoldMan Sachs were asked to pay $500 Million during late 2011 in a deal called Abascus 2007-AC1 where the bank were alleged to mislead its investors on a deal related to Collateral Debt Obligation(CDO). (Eaglesham, 2011) The ab...
A possible flaw of Sarbanes-Oxley is it failed to put up any resistance in thwarting the financial crisis. While the degree to which fraudulent behavior can be traced to the roots of the Great Panic of 2007 will likely be up for eternal debate, it might be telling that Sarbanes-Oxley effectively did nothing. It seems this could indicate that stronger incentives for whistleblowers (such as Dodd-Frank and perhaps other whistleblower protection regimes) are very necessary given the extreme social costs. This conclusion may be hasty, however, given the short time period between the enactment of Sarbanes-Oxley and the crash. Not only is the status of Sarbanes-Oxley still in flux over a decade later, but one has to consider the substantial learning and switching costs associated with a regime with such a substantial ruach. Certainly, this is not to say that additional protections may in fact be necessary given the putative reluctance of lawyers to report fraud, but Sarbanes-Oxley likely needed more time to really crystalize and provide some level of predictability before it can be declared a bust.
From big financial and ethical scandals like Enron to WorldCom, Wells Fargo may be the next big financial and ethical scandal. Wells Fargo used to be one of the leading banks and credit lending companies in America. Now, they’re on a slippery slope downhill to one of the worst—and most unethical—banking and credit lending companies in America, maybe even in the world. Wells Fargo has been in an ethical uproar, has questionable ethical values, and questionable principles and practices in culture due to their downhill ethical standards. The company also may have been influenced by bad stakeholder judgment, and are now struggling to maintain the company’s culture. To give a description of business ethics as described by John Fraedrich, “business
The selected issue for the paper is where an employee has not given their current or potential customers accurate information when opening accounts or requesting new services from Washington Mutual. When a person is in the workplace proper business ethics is used on a daily basis. An employee can make ethical decisions by applying their critical thinking skills to the situation they can ensure that the decision that they make is the right decision. The decision process can be very tiresome process but with the proper procedures one can become a better decisions maker.
The implications of these findings are as follows. The works of these academics highlight the important point that there is higher volatility of capital charges for better quality credits (Goodhart & Taylor, 2004). This is because these credits face a steeper risk curve, as the movement within the ratings scale (from one rating to another) is much greater.
The forced liquidation of some $3 trillion in private label structured assets has been deprived from the financial markets and the U.S. economy has obtained a vast amount of liquidity that the banking system simply cannot restore. It is not as easy to just assign blame within these case however it is noted that the credit rating agencies unethical decisions practices helped add onto the financial crisis of 2008 and took into account the company’s well-being before any other stakeholders.
Nowadays, corporate social responsibility (CSR) becomes an integral part of each company. CSR can be understood as a management concept and a process that links social and environmental issues in business operations to a company’s interactions with it’s stakeholders. CSR not only gives the company a chance to help society but also enhances company’s reputation and investors’ attractiveness. In this paper, we will show a brief description about CSR and effects of CSR on international business, including pros and cons when a company applies the CSR program. Besides that, I give my ideas on conflicts of interest beween shareholders and the company’s managers. And then, advantages and difficulties for companies implementing CSR in Vietnam will be defined. Although CSR was first introduced widely in Vietnam many years, it is still a new concept. Therefore, pioneers in this area are facing lots of challenges in running CSR programs in Vietnam.
In previous years the big financial institutions that are “too big to fail” have come to realize that they can “cheat” the system and make big money on it by making poor decisions and knowing that they will be bailed out without having any responsibly for their actions. And when they do it they also escape jail time for such action because of the fear that if a criminal case was filed against any one of the so called “too big to fail” financial institutions it...
Corporate Social Responsibility, some may say it is an organization's duty to behave in an economically and environmentally acceptable manner but there is more to it that just that. A company has a duty to its shareholders, the duty to maximize benefits and avoid trouble, a responsibility to the employees and others who depend on that company for a living , and last but not least they have the duty to create a safe environment for everyone. A Civil Action by Jonathan Harr depicts a civil lawsuit that takes place in the United States. The lawsuit is filed by residents of a small town, Woburn, in Massachusetts, against two powerful corporations, Beatrice Foods and W.R. Grace, for polluting the water in the local river with carcinogen TCE and causing the deaths of many children. A Civil Action by Jonathan Harr demonstrates that the issue of Social Corporate Responsibility is prevalent throughout the piece but because of the adversary system of law there is no place for apology just winning for both parties.
Globalization Phase, companies were known locally, regionally and internationally, their products were already improved offering innovative services. However, as The Economist (2007) has highlighted, while more global the companies are more aware of corporate social responsibility they need to be, namely, foreign stakeholders will expect, not only innovative and effective products, but also they will open their doors and invest their money to companies that are social responsible.
Global business today not only survives on corporate reputation but as well as social responsibility. Reputation is quite important for the smooth operation of the business especially in today’s internet age where information travels in a few seconds and impact is very fast. Consumers in the present day are more concerned with whether companies are good citizens to the community and for one to do business today it is required for companies to be good global citizens concerned with social responsibility besides profits. As companies
Recently, three individuals were awarded $170 million for helping investigators gather a record $16.65 billion penalty against Bank of America. Based on their action of inflating the value of mortgage properties and selling defective loans to investors. By influencing the market falsely is unethical and wrong. That is also why their punishment was so harsh. Firms today warn their managers and employees that failing to report unethical behavior and violations by others, could get them fired.
While the concept of an individual having responsibility is commonly recognized, modern views have lead to the emerging issue of corporate responsibility. Business Directory.com defines corporate social responsibility as, “A company’s sense of responsibility towards the community and environment (both ecological and social) in which it operates. Companies express this citizenship (1) through their waste and pollution reduction processes, (2) by contributing educational and social programs, and (3) by earning adequate returns on the employed resources.” But such a concept has been much disputed since at least the 1970’s.
Corporate Social Responsibility is all about the effort that a company applies that might be more what is being required by the environmental protection groups. Also, it is a responsibility that a company should take for its effects on the environment and on an impact for a social well-being. Moreover, Corporate Social Responsibility it is all about the ways that the companies manage with the process of their business which gives a positive influence on the society. Generally, the companies have to give an answer for their operation process such as the quality of their company’s management of the people and also, the quantity of the company’s impact in different areas of the society.