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Toshiba Case Study

1021 Words5 Pages

TOSHIBA COMPANY

BALANCE SHEET MAKE-UP SCANDAL, 2015

Exam I

Serhat Kuşkonmaz

0053486

Table of Contents

1. What Was Wrong with Toshiba.......................................................................................................... 2

2. Corporate Governance Issues Which Were Missed ........................................................................ 3

2.1 Conflict of Interest ...................................................................................................................... 3

2.2 Sustainability ............................................................................................................................... 3

2.3 Government Requirements ........................................................................................................ …show more content…

Corporate Governance Issues Which Were Missed

2.1 Conflict of Interest

CEO tried to maximize its bonuses and wealth by showing Toshiba’s profitability as much higher than it

actually was to the public. Instead of the interest of shareholders of the company, all he cared about was

his gain.

2.2 Sustainability

The incredible losses experienced by the firm supports that Toshiba executives were not running the

company in a sustainable manner. Senior management focused on explaining high profits only in their

own terms, however they did not think about a stable and sustainable future for the company.

2.3 Government Requirements

Unrecognized accounting statements are not supported by any state authority. However, Toshiba did not

meet the minimum standards of law by showing its profits higher than its actual level and showing …show more content…

Therefore, the financial results were

distorted by executives in order to show that the expectations of the top management were met.

Toshiba is a publicly traded company and has many local and foreign investors. All the investors invested

in Toshiba shares faced with a huge loss of wealth due to around 50% decline in the company share prices.

3. Actions Taken to Recover the Company from the Scandal

The actions taken to recover the company from the scandal are given below4:

 The company’s CEO, Hisao Tanaka, assistant general manager, Norio Sasak and consultant, Atsutoshi

Nishida resigned from their jobs.

 A new senior management has been appointed.

 The company established and independent Investigation Committee in order to handle and

investigate the accounting manipulation. With this regard, the committee published an evaluation

report.

 The company worked on revising previous years’ financial results to correct the accounting distortion

on its financial statements. In addition, the company published its revised

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