Case | HBS Case Collection | February 2013

Diamond Foods, Inc.

by Suraj Srinivasan and Tim Gray

Abstract

The Diamonds Foods, Inc. case describes the major accounting blow up at the company in late 2011 that was triggered by a report by Off Wall Street, a prominent short selling research firm. Diamond Foods, a high flying growth company in 2011, grew from a walnut farmers' cooperative in 2005 into a branded snack foods manufacturer on the strength of a series of acquisitions. The accounting scandal that involved improper accounting for walnut purchases led to Diamond dropping its high profile acquisition of Pringles, an SEC and DOJ investigation, departure of the CEO and CFO, and the grounding of a high flying growth company. The case describes the history and growth of the company, the investigative and analytical work conducted by OWS and allows students to understand implications of the growth strategy for financial performance and valuation. Additionally, the case highlights the role of corporate boards and audit committees in managing strategic and financial reporting risks.

Keywords: Accounting restatements; accounting scandal; accounting; financial analysis; financial statement analysis; financial statements; valuation; short selling; revenue recognition; board of directors; audit committees; auditing; Financial Reporting; Financial Statements; Agribusiness; Accrual Accounting; Earnings Management; Corporate Accountability; Corporate Disclosure; Corporate Governance; Valuation; Revenue; Agriculture and Agribusiness Industry; California; Cambridge;

Citation:

Srinivasan, Suraj, and Tim Gray. "Diamond Foods, Inc." Harvard Business School Case 113-055, February 2013.