Olympus corporation scandal 2011 and corporate governance failures - Coursework Example

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The Olympus Corporation, Japan was involved in a $1.7 billion scam in 2011, which related to its manipulation of accounts for speculative losses incurred by it over the period of lost 10 years. Critics argue that scam was the result of failure of corporate governance code of…
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Olympus corporation scandal 2011 and corporate governance failures
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Download file to see previous pages counting standards for accounting investments , poor play by institutional investors , non-existence of strong take-over codes and the role of statutory auditors to certify the accuracy of company accounts (Tricker & Tricker 2014:176). This research essay will examine how Olympus Corporation was organised , will discuss in-detail about the prevention of such scams in future in Japan by suggesting suitable measures by strengthening the existing corporate governance codes of Japan.
The Olympus Corporation (hereinafter will be referred as OC) scandal was related to financial reporting, which offers an opportunity to throw some light how both practical and theoretical issues were the causes for the reform in the Japanese corporate governance model. Japan’s continuous reluctance to appoint independent directors- the concept which was introduced in the U.S. on the pressures from global institutional investors in the 1990s was one of the reasons for the failure of corporate governance in Japan. The main aim of the corporate governance should address risk management and conflicts of interest instead of concentrating mainly on enhancing performance of the business (Schreck 2009:57). In the absence of independent monitors to make any probable monitoring of management, it is really not practical to make corporate governance more vibrant. A good operating environment would include updated information disseminations, strong implementation, especially through private litigations and entrusting active roles to external auditors (Woodford 2012:2).
OC establi shed a tobashi scheme to transform its losses off the balance sheet of Olympus. A A tobashi scheme is a financial scam where the losses incurred by a company are camouflouged by an investment firm by transfering them between other fake or genuine clients or the portfolios. Cayman based companies were acquired by paying abnormal acquisition and management fees. When Michael Woodford, a British, who was appointed CEO of ...Download file to see next pagesRead More
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