Japan signalled plans to strengthen disclosure rules on mergers and acquisitions (M&A) after a $1.7 billion accounting fraud at Olympus Corporation, one of the nation's worst corporate scandals, which involved a series of shady deals.

Financial Services Minister Shozaburo Jimi said Japan's financial regulator and the Tokyo Stock Exchange would both look for ways of improving disclosure on M&A deals.

"As the resolution of this (Olympus) case proceeds, there is a need to check the workings of the system and discuss policies to prevent a recurrence," Jimi said.

Jimi declined to give specifics, saying these had yet to be worked through. He did not give a timeframe.

Japan's regulator will consider requiring that firms disclose fees paid to advisers and information on acquisition targets, although it will likely look to set thresholds for disclosure based on the size of the deal, two sources familiar with the matter said.

"If you are too stringent, if you require everything to be disclosed, there is a risk that it could discourage M&A," said one of the sources.

Setting strong disclosure rules could set a precedent for Asia. In the US, companies often detail M&A transaction details. But it is rare to get such publicly available information in Asia.

Olympus, a maker of cameras and medical equipment, spent hundreds of millions of dollars on dubious M&A deals as part of an accounting deceit which hid investment losses from investors for 13 years.

The M&A payments included an exorbitant $687 million advisory fee paid mostly to a now-defunct Cayman Islands firm, which did not come to light until former chief executive Michael Woodford blew the whistle on the deal after he was sacked two months ago.