Corporate Governance, Cross-Listing, and Managerial Response to Stock Price Discounting: Royal Ahold and Market Arbitrage - Amsterdam and New York, 1973-2004

27 Pages Posted: 3 Feb 2005

See all articles by Rob Bauer

Rob Bauer

Maastricht University

Gordon L. Clark

Oxford University - Smith School of Enterprise and the Environment

Dariusz Wojcik

University of Oxford, St. Peter's College

Date Written: October 12, 2004

Abstract

Of the events signalling the end of the TMT bubble, scandals of corporate governance in the US and Europe captured the public imagination. In play were the greed and hubris of senior executives prompting further debate over countries' standards of corporate governance. If Enron and WorldCom were the US reference points, Ahold and Parmalat were the European instances. Ahold was especially important, being an instance of significant internal accounting and reporting failures and an instance of poor public disclosure of market-sensitive information. We report the analysis of market trading in Ahold stock in both Amsterdam and New York. It is shown that greater volatility in Amsterdam daily closing prices presaged the crisis to come in Ahold shares suggesting the leakage of information to privileged insiders. It is also shown that New York prices were inefficient not withstanding the advantages of a New York listing for the firm. Implications are drawn for the theory of global finance, and the nature and scope of convergence in national standards of corporate governance. It is argued that the co-existence of rather different regimes of governance may be undercut by the reaction of institutional investors in the global financial market place to the actions of corporate management.

Keywords: Ahold, corporate governance, cross-listing, time-space market pricing

JEL Classification: F36, G14, G15, G32

Suggested Citation

Bauer, Rob and Clark, Gordon L. and Wojcik, Dariusz, Corporate Governance, Cross-Listing, and Managerial Response to Stock Price Discounting: Royal Ahold and Market Arbitrage - Amsterdam and New York, 1973-2004 (October 12, 2004). Available at SSRN: https://ssrn.com/abstract=604530 or http://dx.doi.org/10.2139/ssrn.604530

Rob Bauer

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31 43 3883871 (Phone)

Gordon L. Clark (Contact Author)

Oxford University - Smith School of Enterprise and the Environment ( email )

South Parks Road
Oxford, OX1 3QY
United Kingdom
+44 1865 285197 (Phone)
+44 1865 285073 (Fax)

HOME PAGE: http://www.geog.ox.ac.uk/staff/glclark.html

Dariusz Wojcik

University of Oxford, St. Peter's College ( email )

New Inn Hall Street
Oxford, OX1 2DL
United Kingdom

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