The scandal at Toshiba has got Japan’s government worried that investors will lose confidence in the country. Japan has its own problems with antiquated oversight of top managers but companies have cooked the books throughout history and worldwide.
Pawel Bilinski, director of the Centre for Financial Analysis and Reporting Research at Cass Business School, said: “Accounting scandals happen because there is pressure to meet short-term market expectations in terms of financial and share price performance.
“Bonuses and share options are often linked to hitting particular targets and these pressures may entice executives to engage in creative accounting. Companies can also manage their operations by delaying investments or selling assets to reach certain goals. As long as there are market pressures, we can expect some firms to resort to creative accounting to shore up their performance.”