Can you teach an old dog new tricks? Olympus Corp. investors appear willing to bet so.

Shares of the camera and medical-device maker, which was mired in a $1.7 billion accounting scandal in 2011, have surged to their highest in almost three years after the Japanese company announced a leadership and board shakeup in response to pressure from U.S. hedge fund ValueAct Capital Management LP.

“Transform Olympus,” timed to coincide with Olympus’s 100-year anniversary, also includes cost cuts and a reshaping of the medical business that accounts for most of sales. Hiroyuki Sasa, appointed chief executive officer in 2012 to handle the fallout from the accounting fraud, will be replaced by Chief Financial Officer Yasuo Takeuchi. Crucially, Olympus will also appoint three foreign board members, including ValueAct partner D. Robert Hale.

While Olympus shares recovered under Sasa’s tenure, the company has failed to stay free of controversy. One of its in-house lawyers called in November for a reexamination of allegations that Olympus bribed Chinese customs officials through a local consultancy firm. “Even though Olympus promised to review its corporate governance after the 2011 scandal, the company hasn’t changed,” Hiroki Sakakibara, who is suing the firm, said then. Olympus said earlier that an external investigation found no instances of bribery breaching Japanese, U.S. or Chinese law.

Then last month, a unit of Olympus agreed to pay $85 million to settle allegations from the U.S. Justice Department that it failed to report incidents of infections linked to use of its duodenoscopes, devices that are inserted through the mouth, throat and stomach to examine the entrance to the small intestine. The company has improved the design and put in more stringent disinfection procedures for the devices. 

Olympus remains under deferred prosecution agreements relating to alleged kickbacks to U.S. doctors and bribes in Brazil. Those agreements, struck in 2016, expire within a few weeks and any violations during the period could expose the company to further penalties.

That’s quite a list for a company that looked like it was drawing a line under its problems seven years ago. Still, investment banks from Morgan Stanley to Goldman Sachs Group Inc. are optimistic. Goldman has a buy rating on the stock, noting that Sasa didn’t renew a poison pill arrangement that expired in 2016 and has changed the composition of the board. From having no outside directors, 55 percent of the Olympus board is now independent. On top of that, the average tenure halved to three years between 2011 and 2017. 

By bringing in ValueAct’s Hale and promising to add two more international executives with medical experience (a rare Japanese concession to an activist investor), Olympus is signaling a willingness to further improve its corporate governance. Those moves compare favorably with Nissan Motor Co., whose three independent directors included a former racing-car driver and a retired bureaucrat without an auto-industry background, as my colleague Anjani Trivedi noted.

Seen through that lens, Olympus may be worth another look.

To contact the author of this story: Nisha Gopalan at

To contact the editor responsible for this story: Matthew Brooker at

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.

©2019 Bloomberg L.P.