Nidec's founder pressure drove $1B in improper accounting — and a Nikkei ejection

In September 2025, Nidec, Japan's largest precision motor maker and a Nikkei 225 component, disclosed that a third-party investigation had found systemic improper bookkeeping and accounting irregularities. The probe traced the root cause to excessive pressure from founder and chairman Shigenobu Nagamori, who had driven the company to meet aggressive earnings targets. The accumulated net profit impact was confirmed at 161 billion yen (approximately $1 billion).

The Tokyo Stock Exchange designated Nidec a 'security on special alert' and issued a delisting warning. On October 28, 2025, the TSE announced that Nidec would be removed from both the Nikkei 225 and TOPIX benchmark indices, effective November 2025. The stock had already fallen 22% on the day of the disclosure and dropped another 19% on the index-removal announcement, losing roughly 30% from the pre-disclosure level.

The scandal damaged investor trust in Japan's corporate governance reforms and highlighted the risks of the charismatic founder model that had produced some of Japan's most successful companies. Nidec had been a market darling for years, celebrated for its growth under Nagamori's leadership, and the gap between the public narrative and the accounting reality was wider than any single quarter's misstatement.

The TSE removed Nidec from the Nikkei 225 and TOPIX after a probe found 161B yen profit impact, and the stock lost roughly 30%.

Founder pressure to meet aggressive earnings targets created a culture where improper bookkeeping became the path of least resistance

The company's growth narrative was so strong that neither internal controls nor external auditors caught the gap between reported and actual performance

The same governance structure that made Nidec agile and ambitious also removed the checks that would have stopped the accounting drift

The same governance culture that drives growth can drive misreporting. A founder-led company without internal checks will find its numbers answering to the culture rather than the truth.