Please discuss the Olympus Corporation case study focusing on describing the problem and identifying the cause(s) and the cultural elements of the case. Please share a brief description of the culture of your country as it would relate to this case. Does your country’s culture support whistle blowing, or discourage it?  

Journal of Business Case Studies – Second Quarter 2014 Volume 10, Number 2

Copyright by author(s); CC-BY 175 The Clute Institute

Olympus Corporation Financial Statement

Fraud Case Study: The Role That National

Culture Plays On Detecting And

Deterring Fraud
Anita R. Morgan, Ohio Northern University, USA

Cori Burnside, Indiana University East, USA


Recent cases provide insight into the role that an unethical corporate culture plays in financial

statement fraud. The case of financial statement fraud in Olympus Corporation, a Japanese firm,

provides the opportunity to examine how national culture plays a role in corporate governance

and fraud detection. This case study focuses on the impact of Japanese culture on the corporate

culture of The Olympus Corporation, and how that corporate culture resulted in financial

statement fraud.

Keywords: Olympus Corporation; Financial Statement Fraud; Corporate Culture; Japanese Culture; Case Study


n April 1, 2011, Michael Woodford became the first non-Japanese president and COO of Olympus

Corporation. He was fired six months later on October 14, 2011. In a press conference, Tsuyoshi

Kikukawa, Chairman of the Board of Directors of Olympus stated, “We hoped that he could do things

that would be difficult for a Japanese executive to do. But he was unable to understand that we need to reflect a

management style we have built up in our 92 years as a company, as well as Japanese culture” (Dye, 2013).

Woodford’s tenure as President was rocky. In July of 2011, after being in office only about three months,

Woodford received an e-mail directing his attention to an article in a Japanese magazine (Facta) that accused

Olympus of financial statement fraud. His questions to Kikukawa about the allegations against the company were

not fully answered. In early August, Woodford learned that others in the company were instructed by Kikukawa not

to tell him about the article in Facta. Kikukawa and other executives of the company began treating him coldly. In a

series of letters to the Board of Directors, Woodford asked for details regarding the accounting transactions in

question; he received no clear response to his questions, and was subsequently dismissed by the Board.

Realizing that the likelihood of financial statement fraud was high, Woodford blew the whistle on the

company, exposing the suspect transactions. This case study focuses on the impact of Japanese culture on the

corporate culture of The Olympus Corporation, and how that corporate culture resulted in fraud.


According to the 2012 Report to the Nations (ACFE, 2012, p. 10) published by the Association of Certified

Fraud Examiners, financial statement fraud is a scheme “in which an employee intentionally causes a misstatement

or omission of material information in the organization’s financial reports (e.g., recording fictitious reve

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