Case Study Royal Ahold Scandal

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Overview: Ahold was a major retailer in the US and Europe. The accounting scandal that took place at Ahold 's US Foodservice financially destabilized the company and also had very adverse effect on its share price and market standing. The company was forced to order an internal investigation due to this scandal which also revealed other irregularities at its operating companies spread across US, Latin America and Europe. The series of frauds and mismanagement affected the company’s reputation very badly. Ahold then forced its top management to resign. Post that, a new management and a forward-looking strategy have brought the company back from the brink of bankruptcy. Case Details: The scandal was that, Royal Ahold, a food retailer in the Netherland had overstated their profits by as much as half a billion dollars. In reaction to this news, the stock of Ahold at Amsterdam Stock Exchange took a dive of nearly 55 per cent in a single day on Monday the 24th February. This scandal is known as “Europe’s Enron” in US.…show more content…
But at the time that Ahold announced that it had to restate its financial results, the annual report had yet to be released. Therefore, the annual report that Ahold published later is actually the audited and corrected version. The corrections are made in this version based on the various investigations and audits performed within Ahold internally and all of its subsidiaries at that point of time. The 2002 annual report was finally published very late in 2003 on October 2nd. Ahold got approval from its shareholders, to be able to delay the publication of its annual report this much, on May 13th of

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