Similarities Between Olympus And Lehman Brothers

1.Facts of corporate scandals

Olympus

Olympus is the Japanese-based manufacturer specialized in optical technology product. In 2011, the company hired a british CEO, Michael Woodford who after that investigated into the huge advisor fee of $687 million in transaction to acquire Gyrus. There were several questions about these acquisition transactions seeking for answer from the board of director but they simply dismissed him as CEO after 2 weeks working without any explanation. With the assistance of PwC, Woodford had submitted his finding and PwC reports to FBI and Serious Fraud Office for further investigation (Carozza 2012).

Soon after that, November 2011, Olympus admitted to use inappropriate accounting method to conceal investment losses since 1990s. Olympus initially hid the losses by

ABC had paid more attention on expansion rather than running the business. ABC had experienced the failure in accounting by using the poor revaluation method and recording issue. They also experienced the poor corporate governance in which ABC had some related party transaction with the company Groves was the major stakeholders or his brother in law was director. These factors plus the overcontrol in staff cost contributed to the collapse of ABC. The similarities between the three scandal.

The similarity between Olympus and Lehman Brothers is using fraudulent transaction to conceal their losses. While Olympus manipulated transactions by moving bad asset from balance sheet without recognizing losses, Lehman Brothers took advantage of accounting method for a short term borrowing of cash.

Both of these two companies purposely practice illegal accounting practices in the transaction with some related parties to conceal the losses to community and potential investors. As the results, after the scandal, the share price of both company dropped rapidly and Lehman Brothers went to