Nidec's Accounting Crisis and Delisting Risk: A Reckoning for Expansion-at-All-Costs Corporate Culture?

A Governance Crisis Unfolds

The crisis began in late 2024 when Nidec announced a third-party investigation into suspected accounting irregularities at its China subsidiary, Nidec Techno Motor. According to a report by , the probe revealed a 200 million yen ($1.35 million) lump-sum payment linked to underreported customs values and internal control deficiencies. These findings triggered a 22.44% single-day plunge in Nidec's American Depositary Receipts (ADRs) and prompted the Tokyo Stock Exchange (TSE) to issue a Special Security Alert.

The fallout has been severe. In October 2025, Nidec withdrew its fiscal year 2026 earnings forecast and scrapped its interim dividend, citing the ongoing investigations. This lack of transparency has eroded investor confidence, with the company's stock price reflecting heightened volatility. As Bloomberg notes, the TSE's alert underscores systemic weaknesses in Nidec's governance framework, particularly its oversight of overseas operations.

Expansion-at-All-Costs: A Double-Edged Sword

Nidec's aggressive expansion strategy, long championed by founder Shigenobu Nagamori and CEO Mitsuya Kishida, has been both a driver of growth and a source of risk. In 2024, the company launched a $1.6 billion unsolicited bid for Makino Milling Machine, a Tokyo-listed machine tool manufacturer. While the move aimed to diversify into higher-margin sectors, it faced fierce opposition from Makino's labor union, which cited concerns over deteriorating working conditions tied to Nidec's acquisition history.

This pattern of rapid, often contentious takeovers-such as the 2022 hostile bid for Takisawa Machine Tool-has raised red flags among governance experts. observes, Nidec's expansion strategy frequently bypasses traditional due diligence and board collaboration, prioritizing speed over transparency. Such practices, while historically successful in consolidating market power, have now backfired as internal controls fail to keep pace with operational complexity.

Shareholder Value in Freefall

The direct impact on shareholder value is stark. Despite a projected 21% year-to-date stock decline, Nidec's second-quarter net profit more than doubled to 47.6 billion yen ($308 million), driven by demand for AI server cooling equipment. However, this financial performance has been overshadowed by governance concerns. analysis highlights that Nidec's first-quarter operating-profit margin dipped to 9.6%, signaling margin pressures amid global inflation.

Legal risks further compound the crisis. The Rosen Law Firm is investigating potential securities claims, with a class-action lawsuit looming over the accounting scandal. Meanwhile, the TSE's Special Security Alert has forced Nidec to commit to overhauling its internal management systems-a costly and time-consuming process that could delay recovery efforts.

Expert Perspectives and the Path Forward

Corporate governance experts argue that Nidec's crisis is a cautionary tale of unchecked expansion. report notes that the company's withdrawal of earnings forecasts and dividend cuts reflect a loss of credibility. To restore investor trust, analysts emphasize the need for structural reforms, including enhanced board independence and stricter audit protocols according to a TSE shareholder reminder.

Yet, Nidec's strategic investments in emerging sectors-such as a 5 billion yen expansion of AI cooling systems in Thailand-suggest a long-term vision as reported by . If governance reforms align with these innovations, the company could yet regain its footing. However, as Bloomberg underscores, the path to recovery hinges on proving that its corporate culture has fundamentally shifted from "growth at all costs" to sustainable, transparent practices.

Conclusion

Nidec's accounting crisis and delisting risks are not isolated incidents but symptoms of a deeper governance failure. While its expansion strategies once fueled growth, they now threaten to unravel decades of value creation. For shareholders, the critical question remains: Can Nidec rebuild trust without compromising its aggressive innovation agenda? The answer will likely determine whether the company emerges as a reformed industry leader-or becomes a cautionary tale of corporate hubris.