Nidec Shares Drop 22% as China Unit Investigation Reveals Accounting Problems

Tokyo — Nidec Corp. shares dropped as much as 22% on Thursday, their biggest one-day decline ever, following the Japanese motor manufacturer's disclosure of an investigation into wrongful accounting practices related to its operations in China.

The Japanese company, based in Kyoto, disclosed an in-house probe at subsidiary Nidec Techno Motor uncovered proof that a ¥200 million ($1.35 million) upfront payment can be traced to Nidec's management. A third-party independent committee has now been installed to investigate.

The investigations identified several documents indicating that, aside from Techno, the Company and group companies of the Company may have been involved in inaccurate accounting with the participation or consent of its or their management," Nidec revealed in a regulatory report.

Nidec, the global leader in the production of mini and brushless motors applied in hard disks, electric vehicles, home appliances, and factory robots, is also already under investigation this year. It postponed its quarterly report earlier in June over mistakes in country-of-origin declarations of data, potentially resulting in unpaid tariffs on imports.

The selling puts Nidec shares at 10.6% year to date, even as the Japan's Nikkei 225 index has risen more than 5%. On Thursday, it finished at ¥2,534, down ¥586 or 18.8%, after previously dropping more than 22%.

Nidec has grown rapidly in recent years, such as the July launch of its Qingdao Industrial Park in Shandong, China, which brought together its motor and electronics manufacturing in one location. But the accounting investigation throws new doubt on its international operations.