Royal Ahold Scandal
No. 2005–57 ROYAL AHOLD: A FAILURE OF CORPORATE GOVERNANCE AND AN ACCOUNTING SCANDAL By Abe de Jong, Douglas V. DeJong, Gerard Mertens, Peter Roosenboom March 2005
ISSN 0924-7815
Royal Ahold: A Failure of Corporate Governance and an Accounting Scandal
Abe de Jong* Department of Financial Management Erasmus University Rotterdam a.jong@fbk.eur.nl Douglas V. DeJong Tippie College of Business University of Iowa douglas-dejong@uiowa.edu Gerard Mertens Department of Financial Management Erasmus University Rotterdam g.mertens@fbk.eur.nl Peter Roosenboom Department of Financial Management Erasmus University Rotterdam proosenboom@fbk.eur.nl
Current Draft: March 11, 2005 Keywords: international economics, financial economics, financial reporting, law and economics, corporate governance, regulation. JEL Classification Numbers: F36, G38, K22, M40 * Corresponding author. Erasmus University Rotterdam, Department of Financial Management, Room F4-32, P.O.Box 1738, 3000 DR Rotterdam, The Netherlands; phone +31-10-4081022. The authors would like to thank Marco Becht, Willem Buijink, Paul Frentrop, Reggy Hooghiemstra, Bruce Johnson, Bill Kinney, Miriam Koning, Mark Penno,Willem Schramade, Roy Suddaby and Bart van Halder for helpful comments and Shan-Twan The for excellent research assistance.
Royal Ahold: A Failure of Corporate Governance and an Accounting Scandal
ABSTRACT Royal Ahold (Koninklijke Ahold NV) was one of the major success stories in the 1990s and is one of the major failures, suffering a complete meltdown, in 2003. We investigate the strategy, accounting transparency and corporate governance of Ahold; elements which jointly drive the firm’s performance over this period of time. In general, the corporate governance, accounting transparency, strategy and firm performance relationships are complex. There is not a fully specified model available to address the inter-relationships, including the endogeneity problem. The econometrics are difficult and
ISSN 0924-7815
Royal Ahold: A Failure of Corporate Governance and an Accounting Scandal
Abe de Jong* Department of Financial Management Erasmus University Rotterdam a.jong@fbk.eur.nl Douglas V. DeJong Tippie College of Business University of Iowa douglas-dejong@uiowa.edu Gerard Mertens Department of Financial Management Erasmus University Rotterdam g.mertens@fbk.eur.nl Peter Roosenboom Department of Financial Management Erasmus University Rotterdam proosenboom@fbk.eur.nl
Current Draft: March 11, 2005 Keywords: international economics, financial economics, financial reporting, law and economics, corporate governance, regulation. JEL Classification Numbers: F36, G38, K22, M40 * Corresponding author. Erasmus University Rotterdam, Department of Financial Management, Room F4-32, P.O.Box 1738, 3000 DR Rotterdam, The Netherlands; phone +31-10-4081022. The authors would like to thank Marco Becht, Willem Buijink, Paul Frentrop, Reggy Hooghiemstra, Bruce Johnson, Bill Kinney, Miriam Koning, Mark Penno,Willem Schramade, Roy Suddaby and Bart van Halder for helpful comments and Shan-Twan The for excellent research assistance.
Royal Ahold: A Failure of Corporate Governance and an Accounting Scandal
ABSTRACT Royal Ahold (Koninklijke Ahold NV) was one of the major success stories in the 1990s and is one of the major failures, suffering a complete meltdown, in 2003. We investigate the strategy, accounting transparency and corporate governance of Ahold; elements which jointly drive the firm’s performance over this period of time. In general, the corporate governance, accounting transparency, strategy and firm performance relationships are complex. There is not a fully specified model available to address the inter-relationships, including the endogeneity problem. The econometrics are difficult and
References: 31 DiGeorgio, R., 2002 32 Moeller, S.B., Schlingemann, F.P., Stulz, R.M., 2005