Case Study Analysis of Royal Ahold Scandal
Final exam assignment
Introduction
Over the last few decades there have been a number of cases of high profile corporate collapses and fraud scandals. In essence, the unethical behaviour of corporations affects us all, such as shareholders’ lost financial investments, employees who lost their jobs, other companies that provided goods and services to the company, as well as the economic impact on domestic and international communities. In this paper I will focus on the case study of Royal Ahold and the large accounting fraud that took place within the company. The issues I will address include Ahold’s transparency and disclosure weaknesses, its demanding culture focused on economic growth regardless of certain ethical principles, the weaknesses of corporate governance within Europe and the United States, as well as the influences a company’s global expansion has on corporate governance and its financial risks. As an analytical framework, I would like to use Robins’ (2006) Technical, Political and Cultural problem analysis framework, in order to elevate understanding of the problems at Ahold by analysing it from these perspectives.
I wish to argue throughout my paper, that all of these aspects are in some way related to a company’s respective shareholder or stakeholder approach to business operations. The shareholder approach focuses mainly on creating shareholder value by maximising profits, with a lot of pressure on short term financial performance. Stakeholder theory on the other hand also takes into account the interests of parties other than the shareholder, e.g. employees and suppliers. All aspects of the company are dependent on which of these approaches it follows.
1. An analysis of the weaknesses of Ahold’s approach to transparency and disclosure.
In this first section I would like to examine Ahold’s approach to transparency and disclosure. This falls under Robbins’s technical framework, as it examines aspects of accounting rules and principles,
Introduction
Over the last few decades there have been a number of cases of high profile corporate collapses and fraud scandals. In essence, the unethical behaviour of corporations affects us all, such as shareholders’ lost financial investments, employees who lost their jobs, other companies that provided goods and services to the company, as well as the economic impact on domestic and international communities. In this paper I will focus on the case study of Royal Ahold and the large accounting fraud that took place within the company. The issues I will address include Ahold’s transparency and disclosure weaknesses, its demanding culture focused on economic growth regardless of certain ethical principles, the weaknesses of corporate governance within Europe and the United States, as well as the influences a company’s global expansion has on corporate governance and its financial risks. As an analytical framework, I would like to use Robins’ (2006) Technical, Political and Cultural problem analysis framework, in order to elevate understanding of the problems at Ahold by analysing it from these perspectives.
I wish to argue throughout my paper, that all of these aspects are in some way related to a company’s respective shareholder or stakeholder approach to business operations. The shareholder approach focuses mainly on creating shareholder value by maximising profits, with a lot of pressure on short term financial performance. Stakeholder theory on the other hand also takes into account the interests of parties other than the shareholder, e.g. employees and suppliers. All aspects of the company are dependent on which of these approaches it follows.
1. An analysis of the weaknesses of Ahold’s approach to transparency and disclosure.
In this first section I would like to examine Ahold’s approach to transparency and disclosure. This falls under Robbins’s technical framework, as it examines aspects of accounting rules and principles,
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