A day of confusion reveals Toshiba's broken governance

A day of confusion reveals Toshiba's broken governance
Toshiba Corp. President Satoshi Tsunakawa leaves after a press conference at the company's headquarters in Tokyo on February 14, 2017.

TOKYO - Toshiba has abruptly postponed an earnings announcement, citing the need for an internal probe, but to distrustful investors, the move shows how the troubled conglomerate has failed to learn from past missteps involving information disclosures.

Tuesday was a chaotic day for Toshiba. Earnings for the nine months through December were due out at noon. At first, the only word from the Japanese company was a notice on its website, posted a few minutes after noon, that the report had not yet become available.

Toshiba shares, which had been trading down slightly since the morning, saw a deluge of sell orders in the afternoon session. The stock closed down 8 per cent at 229 yen. Around 2:30 p.m., near the end of trading hours, Toshiba finally issued a statement saying it was delaying the earnings release and explaining the reason behind the probe. Internal reports suggested governance problems at nuclear unit Westinghouse Electric related to the ill-fated acquisition, requiring an investigation that could affect nine-month earnings, the company said.

The company said at 5 p.m. that a news conference would be held at 6:30 p.m. -- two and a half hours later than originally scheduled. An unaudited earnings estimate was released at 5:10 p.m., at which time the resignation of Chairman Shigenori Shiga was announced as well. At the news conference, President Satoshi Tsunakawa apologised for the earnings delay.

Toshiba has repeatedly bungled information disclosure since its 2015 accounting scandal. That May, restated earnings for previous fiscal years were posted just before midnight. A November 2015 news conference was held on a Saturday, when markets are closed. Reports that month that Toshiba had been slow to disclose past Westinghouse-related losses forced the company to call a hastily arranged news conference to respond.

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