Toshiba

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Illinois Institute Of Technology *

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MISC

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Accounting

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Nov 24, 2024

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Surname 1 Student’s Name’ Professor’s Name Course Date Toshiba’s Westinghouse Dilemma Toshiba, incorporated as a telegraphy shop in 1875, was an embodiment of Japan’s industrial growth and rated a blue-chip fortune 500 global corporations. The company’s growth expanded exponentially, in the 1980s and 1990s, primarily due to Japanese incentives to encourage innovation, using low-interest loans, artificial limits, and subsidies (Toshiba Westinghouse Dilemma 2). However, the company’s success began to fade due to the entrance of low-cost companies from Asian countries, which started to offer products at lower prices, leading to declining revenue in Toshiba’s personal computers. The 20 accounting and governance scandal has adversely affected the company’s growth and success in the markets globally. What went wrong at Toshiba? Toshiba’s failure stemmed from a wide range of problems inherent to the company’s management and strategic decision-making. The primary concern was that the management put immense pressure on the subordinates to meet outrageous goals, emboldening lowly-ranked managers and supervisors to engage in inappropriate accounting practices. Besides, despite high competition from other companies selling similar products as Toshiba, the company failed to innovate. Moreover, its top-down culture created a toxic relationship between leaders and their subordinates. As a result, most illegal accounting practices were unreported because junior employees did not have confidence in their seniors (Toshiba Westinghouse Dilemma 2). Increased focus on organization-wide profit generation allows employees to manipulate earnings,
Surname 2 making it impossible to continually whistleblow or the internal control systems to detect fraudulent dealings. Furthermore, the 2015 accounting and governance scandal had already damaged its reputation, aggravating its financial struggles. Therefore, Toshiba faced numerous ethical, management, and fraud issues, contributing significantly to its challenges. Was PwC correct in believing that the losses should have been booked earlier? PWCwas correct in believing that Toshiba’s losses stemming from Westinghouse unit should have been disclosed in 2015. The company’s responsibility is to promote transparent and ethical accounting principles, standards, and regulations. For this reason, Toshiba should have accounted for the losses in 2015 and not the fourth quarter of 2016 (Toshiba Westinghouse Dilemma 4). Such an incident highlighted the continually growing accounting challenges and malpractices that the company failed to address. As an international company, Toshiba should have adopted ethical and principles accounting practices to regain its trust with the customers and restructure its management and culture to foster growth. Therefore, PwC was right in emphasizing that the losses should have been booked earlier. Based on TSE’s delisting criteria, should Toshiba have been delisted? TSE had the right to delist Toshiba because the company made false statements and engaged in fraudulent activities, jeopardizing shareholders’ capital or wealth. Furthermore, PwC had expressed an adverse opinion regarding its financial statements following its failure to disclose losses on time and other accounting malpractices (Japan Exchange Group). Toshiba has been involved in increasingly growing and inappropriate accounting practices against the TSE regulations and company listing guidelines. Therefore, TSE had all the rights and reasons to delist Toshiba. Overall, Toshiba’s cases highlight the challenges most companies face amid
Surname 3 technological changes and globalization. The company failed to establish innovative strategies to remain competitive and profitable, losing its market share to other highly innovative companies. On the other hand, the company could not implement excellent employee management techniques, change its corporate culture, and establish critical internal control systems, which would have helped the company identify and rectify accounting malpractices. Toshiba also failed to cultivate a culture of ethics, honesty, and integrity among employees, who should have whistleblowing before things got out of hand. Therefore, Most of Toshiba’s challenges were self- inflicted and deserved to be delisted so that it could reorganize itself and build its brand again.
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Surname 4 Works Cited “Toshiba Westinghouse Dilemma.” Harvard Business Publishing Education , 2020. Japan Exchange Group. “Criteria for Delisting.” Japan Exchange Group , 30 Apr. 2021, https://www.jpx.co.jp/english/equities/listing/delisting/02.html. Accessed 14 March 2022.