Corporate Governance Versus Ethics. The Case of Goldman Sachs
Journal Title: Journal of Management and Financial Sciences - Year 2015, Vol 21, Issue 3
Abstract
The purpose of this paper: The purpose of this paper is to addresses corporate governance shortcomings identified in the pre-crisis period using the example of Goldman Sachs, it attempts to reveal the company’s divergence from fundamental ethical values of the prime interest of shareholders and clients. Design/methodology/approach: This paper presents a case study of Goldman Sachs, one of the most successful yet the most controversial investment banks known for its strategy in linking politics and business. The practice of Goldman Sachs is identified within the corporate governance and business ethics framework. Findings: The case study presents and discusses Goldman Sachs’ ethically questionable operations which include helping Greece in the creative accounting for hiding the real debt level though the use of currency swaps, betting against credit default swaps while selling those instruments to clients (ABACUS scheme) and the instrumental treatment of customers referred to by the company as ‘muppets’. Research implications: The paper proposes an analysis of the structural corporate governance failures which led to the outbreak and development of the credit crunch relating them to unethical and irresponsible behaviour noted in the pre-crisis period. The lack of integrity and strong values, dominant public respect based on the level of consumption and personal wealth as well as the prime priority of generating short term profits proved to be the key drivers for the inefficiencies in corporate governance. The phantom declaration of ethical conduct and the lack of the internalization of codes of best practice led to trust crisis on the market and resulted in the deterioration of economic performance. Originality/value: The paper contributes to the development of the knowledge on both corporate governance and business ethics tracking patterns for the convergence or potential divergence of these two notions. Using the case study of Goldman Sachs it also attempts to understand the behaviour of the largest players on the stock market with regards to their business ethics and corporate governance practice. Finally, the paper studies the causes of the financial crisis rooted in the corporate quest for the highest profitability
Authors and Affiliations
Maria Aluchna
Keywords
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