Key facts
- Nidec's auditor declined to issue an opinion on the company's financial statements for the fiscal year ended March.
- The Tokyo Stock Exchange designated Nidec's stock as a "Security on Special Alert" due to suspected accounting irregularities.
- A failure to improve internal controls could eventually lead to delisting.
- Nidec's stock price fell as much as 30% since the announcement of the third-party committee on September 3.
- The company has over 100,000 employees and posted consolidated net sales of ¥2.6 trillion ($16.8 billion USD) as of the end of March 2025.
- Nidec is a leading Japanese electrical equipment manufacturer with 90% of its sales overseas.
Nidec Corp. is facing significant pressure to improve its corporate governance and internal controls after its auditor declined to sign off on its delayed financial report, raising the specter of delisting. The Tokyo Stock Exchange designated the Japanese motor maker's stock as a "Security on Special Alert" on October 28, citing suspected accounting irregularities.
This designation comes after Nidec announced on September 3, 2025, that it had established an independent third-party committee to investigate potential improper accounting practices at one of its overseas subsidiaries. Three weeks later, on September 26, the company's audit firm issued a disclaimer of opinion on the interim consolidated financial statements, indicating that it could not verify their accuracy due to the ongoing investigations.
Following these developments, Moody's Japan downgraded Nidec's credit rating from A3 to Baa1 on October 29. The company submitted its semiannual report on November 14, but the audit firm's interim review report also carried a disclaimer of conclusion. Nidec has since withdrawn its earnings forecasts and canceled an interim dividend, as well as a share buyback program announced in May.
Nidec, once a symbol of Japan's manufacturing prowess, is now grappling with a situation that could impact investor trust in the broader Japanese market. The company has over 100,000 employees and reported consolidated net sales of ¥2.6 trillion ($16.8 billion USD) as of the end of March 2025, with approximately 90% of its sales generated overseas. The stock has fallen as much as 30% since the initial announcement of the third-party committee's formation.