Case Study Of Toshiba

815 Words2 Pages

PELİN AKGÜL MGMT 512 - CORPORATE GOVERNANCE

TOSHIBA CORPORATE GOVERNANCE FAILURE

An outsider investigation report discharged on July 20, 2015, found that Toshiba Corporation had

cushioned its benefits by $1.2 billion over the past 6 years. The present and two old presidents and half of the board of directors have resigned from their positions. At the end of the day we are confronted

with the inquiries of how good Japanese corporate governance practices are and how might they be

improved.

When we compared The Toshiba case to other recent Japanese corporate governance scandals such as the Olympus case in 2011, it was shocking news for two …show more content…

Additionally, the report found Toshiba's governance structure relied too heavily on internal

audit as a consulting service rather than as an assurance provider. The audit department focused primarily on providing consulting services to various Toshiba's companies as part of operational audits,

without assessing the appropriateness of accounting processes. While an effective internal audit function

often provides advice and consultancy services for key stakeholders, internal audit will often struggle to address a company's critical risks if little or no assurance is provided to management and the board on

the overall effectiveness of mitigating controls.

Despite a limited focus on assurance, audits by the department twice identified instances of irregularities that could have highlighted the company's accounting problems much earlier. However, they were

dismissed as not significant enough to report.

Besides, more general weaknesses in Japan's corporate governance system that contributed to the
Olympus scandal still remain today. These include relatively weak regulation and little risk of liability …show more content…

The inquiry covered 98 current and former

executives. The committee's report said other than the five executives, no one else at the company could "be found legally liable. It is not reasonable for Toshiba to enforce liability for compensatory

damages" against them.

In my opinion, Japan's corporate governance may be aided by a new corporate governance code for

listed companies. Under this code Japanese companies must now report ("comply or explain") with

respect to a long list of governance issues. Although a clear principle recommending a minimum of two

independent directors has claimed much of the attention, other new areas such as director training and

board self-evaluation may have a greater impact on board functioning. It's not easy to get the corporate governance balance right. The first step is a long one to keep trying. To this point, Toshiba's current

challenges are merely ceremonial. It has to take that first step.

REFERENCES

More about Case Study Of Toshiba

Open Document