Toshiba Corporation Case Study

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ACCOUNTING SCANDAL IN TOSHIBA CORP. Fuat Onur Bağlan MGMT512 CORPORATE GOVERNANCE Summary of what had happened… On April 3, 2015 Toshiba Corporation made an announcement on their website. The announcement of the day was simply a notice, giving information to all the public but especially to the shareholders and investors about the establishment of a Special Investigation Committee [1]. Within the related document, the purpose of the committee was explained as examining the accounting method that is used by the company during the preparation of the results [2]. After approximately a one-month work on the past fiscal years of Toshiba Corp., some inconsistencies should have been detected…show more content…
The difference between the two committees was simple. The first one included Toshiba top management but the second one was, with their own words, “composed solely of fair and impartial outside experts who do not have interests in the Company” [3]. The situation was prescribed by the Japan Federation of Bar Associations. After another two and a half months of work the committee presented its report to Toshiba Corporation. The result was a huge scandal for Toshiba company and the report was revealing a systematic write down of costs which overstates the operating profit [4] of 151,8 billion Yen between years 2008 and 2014 [5]. Within that latest notice on July 20, 2015 the company was apologizing and announcing an upcoming press conference on the next day. On July 21, 2015 Company CEO announced his resignation and the company released the notice of a change in Board of Directors [6]. Corporate Governance Issues That Had Missed… The different resources state almost the same missed corporate governance issues which are mainly and in fact only a few. The first failure is about the Top Management’s enormous pressure put on the employees to achieve…show more content…
To regain the investors’ trust, all the accountings of the previous years were revised and corrected. Actually the company, while at first under consideration, did not file any action against Ernst and Young on being the part of inappropriate accounting. Based on the released notice, the company announced that they are taking all the responsibility of the fraudulent activities instead of putting the blame on other parties [10]. Another taken action was compensation of damages which is the many subject of the file actions against Toshiba [11]. My Thoughts About the Case… In my opinion, Toshiba acted quite positively on the organizational and the financial part of the scandal. Changing the executives, forming an audit committee and selecting outsiders in for it, were the expected actions from a dependable company. Those actions will definitely increase the accountability of the company via maintaining the investors’ trust
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