The facts
Nidec, the Japanese motor maker, watched its shares plunge as much as 19.8 percent to 1,888 yen on October 1, a year-to-date low. The sell-off came after its auditor, PwC Japan, issued a disclaimer of opinion on the company's annual securities report for the fiscal year ended March 2026, which had been filed the previous day.
PwC Japan said it "was unable to obtain sufficient and appropriate audit evidence." It was the second consecutive year the auditor refused to sign off. The stated reason: some officers and employees who were involved in accounting fraud or provided false explanations to the auditor still remain in positions of responsibility within the financial reporting process.
The results behind the disclaimer were grim. Nidec booked an impairment loss of 632.1 billion yen (approximately $4.0 billion) and a net loss of 564.6 billion yen (approximately $3.6 billion), swinging from a profit of 84.6 billion yen (approximately $534.2 million) the prior year to its largest-ever loss. The home appliance, commercial, and industrial segments accounted for 335.1 billion yen (approximately $2.1 billion) of the impairments; the automotive segment totaled 231 billion yen (approximately $1.5 billion). Revenue rose 3.9 percent year-on-year to 2.7087 trillion yen (approximately $17.1 billion).
The Tokyo Stock Exchange designated Nidec a Security on Special Alert effective October 28, 2025. Nikkei Inc. removed the company's shares from the Nikkei 225 index effective November 5. Nidec must submit a written confirmation demonstrating that its internal management system has been improved by the end of October 2026; if the exchange determines the system has not been adequately established, the company will be delisted. Auditing professor Takatoshi Hayashi of Kwansei Gakuin University noted: "This is a strong negative factor in the review for lifting the Security on Special Alert designation. The delisting risk is at a realistic level."
The accounting fraud came to light in September last year. Profit inflation and deferred expense recognition were uncovered, and the third-party committee's final report put cumulative net profit inflation from the fiscal year ended March 2021 through the April-June 2025 quarter at 160.7 billion yen (approximately $1.0 billion). In September, the investigation committee identified 844 instances of improper conduct, including changes to component design and manufacturing processes for home appliance and automotive products.
Management turmoil continues. Founder Shigenobu Nagamori resigned as representative director at the end of last year and as honorary chairman in February. President Mitsuya Kishida, who had led corporate culture and governance reforms, resigned on September 29 after a review found he had made inappropriate remarks and engaged in inappropriate actions regarding financial reporting. Senior managing executive officer Michio Kaida was promoted to succeed him effective the same day.
For the fiscal year ending March 2027, Nidec projects revenue of 2.8 trillion yen (approximately $17.7 billion) and net income of 100 billion yen (approximately $631.4 million), expecting a return to profitability.
Our take
There is a special kind of corporate rot on display when your own auditor, two years running, looks at your books and says it cannot verify a damn thing because the people who faked the last set of numbers are still the ones typing up this set. That is not an accounting disagreement. That is PwC Japan telling the entire market that Nidec's finance department is a crime scene with the criminals still clocking in.
Read the sequence again. The company inflated profits for years. It got caught. The founder who built the pressure-cooker culture walked away. The reformer CEO got caught making inappropriate remarks about financial reporting and also walked away. And the auditor's official complaint is that the fraud-adjacent staff never left their desks. This is a company that treated an accounting scandal the way a bad landlord treats a roach problem: new name on the door, same roaches.
The $4 billion impairment is the bill coming due for all of it. Four billion dollars of value that was never really there, written off in one swing, because the motors for electric cars and Chinese home appliances were not worth what the spreadsheets said. The spreadsheets, recall, were being written by people the auditor will not vouch for.
And then, with a straight face, Nidec projects a return to profitability next year: 100 billion yen in net income, like the last five years of fiction were just a rough draft. Sure. Maybe this time the numbers will be real. Maybe the Tokyo Stock Exchange will accept the written confirmation due at the end of October. Or maybe the exchange will do what the auditor already did and refuse to take this company's word for anything.
The funniest line in the whole saga belongs to the auditor, though it was not meant as comedy. That phrase about being unable to obtain sufficient and appropriate audit evidence is the most expensive way ever devised to say the company was asked to show the receipts and produced a magic trick instead. Now the bill is $4 billion, the stock is at a year low, delisting is on the table, and the only honest sentence in the entire filing was written by the people who refused to sign it.
