Nidec Corp. in Kawasaki, Japan.
Takaaki Iwabu/Bloomberg
Shares of Nidec, the precision motor maker founded by Japanese billionaire Shigenobu Nagamori, plunged by their daily 500 yen limit (19%) on Tuesday after the Tokyo Stock Exchange announced its decision to remove the 52-year-old company from the benchmark Nikkei 225 and Topix indexes.
The exchange designated on Monday Nidec as a “security on special alert.” It cited reasons including lax internal controls and an ongoing investigation over a deepening accounting scandal at one of its subsidiaries. The removal from the Nikkei 225 will be effective on November 5 and the company will be replaced by circuit board maker Ibiden, according to an announcement from the stock exchange. Nidec will be taken off the Topix index on November 4, according to stock exchange rules.
In an emailed statement, a Nidec spokesperson said it will fully cooperate with the investigation and make every effort to strengthen corporate governance as well as restore shareholder trust.
The company first announced in September that it had formed an independent committee to look into what was suspected to be improper accounting practices at a Chinese subsidiary. The scandal concerns 10 million yuan ($1.4 million) worth of payment involving an unidentified supplier.
In Nidec’s annual report for the fiscal year that ended in March 2025, its auditor PwC didn’t express an opinion because the firm couldn’t obtain “sufficient and appropriate audit evidence.” PwC also pointed to the accounting practices in question, which can have a “significant impact on consolidated financial statements” due to arbitrary adjustments as to the timing of asset write-downs.
It remains unclear when the independent investigation will be completed. In its statement explaining Nidec’s removal, the Tokyo Stock Exchange says the results may lead to corrections in previous financial statements.
Amid the crisis, Nidec’s share price is unlikely to recover for quite some time, says Hironori Akizawa, Singapore-based chief investment officer at Tokio Marine Asset Management. The Japan Exchange Group, which operates the Tokyo and Osaka Stock Exchanges, will review the firm’s governance structure in a year, he says.
“If the company’s internal governance structure is not deemed to be properly established or if not expected to be properly managed, it may be delisted,” says Akizawa.
Unless a resolution is in sight, institutional investors are unlikely to hold the stock, he says. Investors also worry about the founder’s retirement, as the billionaire chairman is now 81 years old, says Akizawa. The octogenarian now has a fortune of about $2 billion that is largely based on a company stake, according to Forbes estimates. Last year, he handed the CEO role over to Mitsuya Kishida, one of its senior executives lined up for the top position amid succession plans.
Source: https://www.forbes.com/sites/ywang/2025/10/28/nidec-shares-plunge-on-removal-from-japans-nikkei-and-topix/
