Stakeholders' reactions

Olympus had a market capitalisation of ¥673 billion yen on 13 October, immediately before Woodford was sacked. By the end of the next day, the valuation had fallen to ¥422 billion ($5.5 billion).^[55] Analysts at Goldman Sachs, Deutsche Bank and Nomura Securities, concerned about corporate governance issues at the company as well as it balance sheet, all immediately downgraded their stock ratings.^[55] Goldman Sachs, who had only upgraded its rating in a report dated 12 October, suspended its coverage after Woodford was removed from office.^[7] Nomura and JPMorgan announced on 20 October that their coverage of the company was halted.^[22] It was reported that Government of Singapore Investment Corp., the Singapore sovereign wealth fund which was one of the principal shareholders, immediately disposed of its 2 percent stake on the first hint of scandal.^[56] Share price plunged several days running upon market fears that the shares would be delisted as the company could not meet its reporting mandatory deadline for its quarterly results;^[57] In the week to 18 November Nippon Life announced that its stake had been reduced by one-third, from 8.18 percent to 5.11 percent, because of the uncertainty;^[58] Mitsubishi reduced its stake from 10 percent to 7.6 percent.^[59]

Some major foreign institutional investors have pushed to bring back ousted chief executive Michael Woodford: UK fund manager Baillie Gifford, Harris Associates, and Southeastern Asset Management, owning respectively 4 percent, 5 percent and 5 percent stake, all believed he was the best candidate to lead the cleanup.^[60] Other investors have demanded more disclosures from the company about the state of its affairs.^[61] Domestic investors, including Nippon Life Insurance (8.4 percent stake), demanded "prompt action."^[22][38]

Chart showing Olympus share price between 20 July and 9 December

On 2 November, a shareholder from Nara Prefecture was reported to have asked the company's auditor to bring a case against former executives of Olympus to court to reimburse ¥140 billion yen ($1.79 billion) to the company, failing which he will sue them through another rights group, Lawyers for Shareholders' Rights.^[44] Two American law firms announced that they were initiating 'investigations' Olympus Corporation and some of its directors and were seeking investors who purchased Olympus ADRs between 7 November 2006 and 7 November 2011 on the grounds that the company's share price had been inflated through false accounting and that directors had hidden substantial losses by "false statements and material omissions".^[62][63]

The quotation price of Olympus shares on the Tokyo Stock Exchange (TSE) as of 15 November had fallen by some 75 percent since the scandal erupted. The price continued to be volatile: trading was halted as its price hit the upper limit for price falls. On 14 and 15 November, after the threat of delisting ebbed, trading in its shares was once again halted when buy orders heavily outnumbered sell orders;^[64] the price rose by the upper limit of ¥100.^[65] Trading only took place after hours as there was a glut of unsatisfied buy orders. The share price rose in four straight trading sessions, reaching 834 yen at one point on 16 November.^[64]

Many longtime employees of Olympus Corp are shocked and angry, and feel betrayed by the executives who are responsible for bringing public humiliation onto the company. Former director Koji Miyata started a web site, called Olympus Grassroots, demanding clean-up at the company they say they love^[66] Miyata also circulated a petition targeted at employees calling on the reinstatement of Woodford.^[61] As Olympus has a 70 percent market share in endoscopy, the scandal caused anxiety and concern among the medical profession, which sees Olympus endoscopes as irreplaceable.^[67]

Date: 2015-01-29; view: 717