Toshiba Corp. Accounting Scandal

Toshiba Corp. Accounting Scandal

1.0 Introduction

Over the past seven years, Electronics conglomerate Toshiba Corporation (Toshiba) is reported to have overstated its earnings by $2 billion, which as a result drove the resignation of the CEO and President Hisao Tanaka. Investigations show that employees from the management were pressured to postpone loss reports inappropriately or to move the costs and loss to a later year, by way of exercising discretion and bias in the aspect of cost capitalization (Matthews, 2015).

2.0 PESTEL

2.1 Political / Legal

Japan's Toshiba is facing a legal lawsuit for damages over its recent accounting scandal. According to Rosen Law Firm in New York, damages suit was filed by an investor whom have the major shares of Toshiba. For the period between 2008-2014, Toshiba was reported to have overstated pretax profits by 156.2 billion yen in total for its infrastructure, semiconductor, personal computer and other mainstay businesses (Jiji Press, 2015).

Toshiba also disclosed that they had sued five former employees including two presidents for 300 million yen in connection with the accounting scandal. In the lawsuit, three other chiefs of the management were also being accused for lax oversight whom had already stepped down (Pfanner & Narioka, 2015).

2.2 Economics

The President of Toshiba mentioned in a recent press conference their Japan headquarter that they are trying to regain the trust and rebuilding the company. Following the announcement earlier on, Toshiba is looking into a deal with Canon Incorporation (Canon) for 665.5 billion yen to sell its medical equipment. A profit of 590 billion yen was expected, which Toshiba hopes to be able to cover the losses from the scandal in 2015 (Jiji Press, 2016).

Toshiba shares dropped drastically from topped 500 yen to 283 yen within six months, which bear a costly debt of 1.54 trillion yen in total. Restructuring plans like asset write-downs and reducing cost for workforce is expected to have approximately 500 billion yen loss for the year of 2015 (Mochizuki & Landers, 2015).

2.3 Technological