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Case Study Analysis of Royal Ahold Scandal

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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,



Bibliography: Annual Report 2007. (n.d.). Retrieved August 2, 2008, from Ahold: http://annualreport2007.ahold.com/index.html Claycomb, C. (2004). Worldcom/MCI: Massive Accounting Fraud. In B. Young, R.Monks and N. Minow (eds.). Hartley, R. (2005). Wal-Mart: A Big Bully. In Business Ethics: Mistakes and Successes (1st ed.) (pp. 251-267). USA: Wiley & Sons. Hofstede, G., & Usunier, J. (2003). Hofstede’s dimensions of culture and their influence on international business negotiations. In G. a. (ed), International business negotiations. Jensen, M., & Meckling, W. (2005). The Nature of Man. In D. Chew, & S. Gillian, Corporate Governance at the Crossroad: A Book of Readings (pp. 87-102). New York: McGraw Hill/Irvin. Robins, F. (2006). Corporate governance after Sarbanes-oxley: An Australian perspective. Corporate Governance, Vol. 6 No. 1 , 34-48. Solomon, J. (2007 ). Corporate Governance and Accountability (2nd ed.). Chichester: Wiley and Sons. Young, S. (2008, July 30). Behavioural and Ethical Frameworks Slideshow. Copenhagen, Denmark. Young, S., & Thyil, V. (2008). A holistic model of corporate governance: a new research framework. Corporate Governance Vol. 8 No. 1 , 94-108. Young, S., & Vijaya, T. (2007). Governance, Corporate Social Responsibility and the Individualisation of Industrial Relations. In K. H.-M. Abbott, Work choices: Evolution or Revolution.

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    References: 1. The theory is sometimes called the "stockholder" theory, but the term "shareholder" is used here for consistency with recent usage in the media. 2. M. Friedman, "Capitalism and Freedom" (Chicago: University of Chicago Press, 1962), 133, 3. Note that I am considering only the normative version of the theory, which states how managers ought to behave. There are also desoriptive versions of the stakeholder theory, which describe actual behavior of managers, and instrumental versions, which predict outcomes (for example, higher profits) if managers behave a certain way. These distinctions are drawn crisply in T.M. Jones and A.C. Wicks, "Convergent Stakeholder Theory," Academy of Management Review 24, no, 2 (April 1999): 206-221, 4. J.E, Post, L,E, Preston and S, Sachs, "Managing the Extended Enterprise: The New Stakeholder View," California Management Review 45, no. 1 (fall 2002): 5>28. 5. W.M, Evan and R.E. Freeman. "A Stakeholder Theory of the Modern Corporation: Kantian Capitalism," in "Ethical Theory and Business." 3rd ed., eds. T.L. Beauchamp and N.E. Bowie (Englewood Cliffs, New Jersey: Prentice-Hall, 1988), 97-106, It is to this version of the normative stakeholder theory that the following description refers. Note, however, that Post, Preston and Sachs, who take a more instrumental than normative view of stakeholder theory, embrace a wider enumeration of stakeholders, including regulatory authorities, governments and unions. 6. Note that these are ef^/ca/rights. They may or may not correspond to legal rights or to rights established by professional/industry codes and so on. 7. Some authors — for example, see J, Hasnas, "The Normative Theories of Business Ethics: A Guide for the Perplexed," Business Ethics Quarterly 8, no. 1 (1998): 19-42 — view the "social contract" theory as…

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