Toshiba's $1.2bn accounting scandal and the problem with Japanese corporate governance

It hasn't been easy for prime minister Shinzo Abe to reform the way Japan's companies work.

by Rachel Savage

Olympus, Libor, Enron: sometimes a financial scandal comes along that shakes the very foundations of a country’s corporate life. Toshiba, whose chief executive Hisao Tanaka is stepping down after a scathing independent report released yesterday found he was aware profits had been inflated since 2008, will no doubt join those less-than hallowed ranks.

The conglomerate, which makes everything from TVs to semiconductors and nuclear reactors, overstated its operating profit by 151.8bn yen ($1.2bn, £783m) over the last seven years, as executives pushed their underlings to hit unachievable targets.

‘There existed a corporate culture at Toshiba where it was impossible to go against the boss’ will,’ the report said, pointing to ‘systematic involvement by the top management’.

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