Toshiba Accounting Scandal: A Case Study on Ethical Issues and Stakeholders

Accounting in Society
10/19/2018
Toshiba

Accounting in Society 1
Toshiba Accounting Scandal
The aim of the paper is to present the research-based case study on the corporate cases which are
allocated. The corporate case that has been selected for the report is Toshiba accounting scandal.
The reason behind the selection of the case is that the incident gains the attention of the media
due to the ethical issue. This paper reflects the ethical issues which were faced by the company
and the parties that are involved in these issues. It also covers the details related to the
stakeholders who were impacted due to the ethical dilemma. The issues affected the business and
the parties which are discussed with the help of theories of ethics. Further, the views of the
ethical issues that took place and the lesson learnt from the same are discussed.
Toshiba is a well-known Japanese multinational conglomerate company with the headquarters in
Tokyo, Japan. The operations of the company include its diverse products and services which are
offered by them which mainly include information technology and communication systems and
equipment. The company came into existence in the year 1939 by the merger of Shibaura
Seisakusho and Tokyo Denki.
In the month of February 2015, Japan’s Securities and Exchange Surveillance Commission
identified that company is involved in the accounting irregularities and further commenced for
the investigation of the issues. The commission investigated the profit and the practice of the
company. Sooner, Toshiba received the report and realised a serious issue due to which it
announced the same in the public (Kazuo, 2018). The company found that their profits were
overstated but they were not aware of the exact amount. The company realized that there are
accounting issues due to which they established a third-party investigation committee which
mainly includes lawyers and accountants. It was again found that the company is performing

Accounting in Society 2
improper accounting practices and the profit of the company which was inflated is $1.2 billion.
After the investigation, the company was declared as a fraud due to the unethical accounting
practices. Considering the scandal, Toshiba CEO, Hisao Tanaka and vice chairman of the
company Norio Sasaki resigned in July which shows the clear effect of the ethical issue
(Carpenter, 2018).
The ethical issues have created the direct and indirect effect on the stakeholders of the Toshiba.
The major stakeholders who get affected due to the accounting scandal of the company include
Toshiba stockholders, Executives, Toshiba employees that were involved in the consumer
electronics department and their families, Japan’s Securities and Exchange Surveillance
Commission, customers of the company and the accounting department of Toshiba. The major
stakeholders who were involved in the case were Toshiba accounting department and their
executives because they were directly responsible for the false reporting related to the loss faced
by the company (Cannolly, 2017). Along with this, the employees who were working in the
consumer electronics department and their families were affected because the company fired
more than 7,000 employees by saying that they are solving the unethical issue which is faced by
them. The loss of the jobs affected their families of the employees who were working with
Toshiba.
The stockholders of the Toshiba Company were also interested in the unethical case that took
place because the company was forced to identify the major losses they were not able to record
due to which the stock prices plummet. The stockholders might face the loss due to the change in
the stock prices after the case. In addition, the customers of the Toshiba were also affected
because the incident affected their purchasing decision and now onwards they won’t be able to
make the purchase of the consumer electronics from the Toshiba. Japan Securities and Exchange