Toshiba’s chief executive and president Hisao Tanaka has resigned after the company said it had overstated its profits for the past six years.
He will be succeeded by chairman Masashi Muromachi, with vice-chairman Norio Sasaki also stepping down.
On Monday, an independent panel appointed by Toshiba said the firm had overstated its operating profit by a total of 151.8bn yen ($1.22bn, £780m).
The overstatement was roughly triple an initial estimate by Toshiba.
The company’s business empire stretches from home electronics to nuclear power stations.
“It has been revealed that there has been inappropriate accounting going on for a long time, and we deeply apologise for causing this serious trouble for shareholders and other stakeholders,” the company said in a statement.
“Because of this Hisao Tanaka, our company president, and Norio Sasaki, our company’s vice chairman… will resign today.”
Mr Tanaka told a media conference that “we have a serious responsibility”, adding that the company would need to “build a new structure” to reform itself.
Mr Tanaka, 64, and Mr Sasaki, 66, both joined Toshiba in the early 1970s.
Mr Tanaka and his predecessors are among eight high-level executives who have now resigned after the independent report found senior management involved in a scheme to inflate profits over several years.
People took to social media to express their concern at the scandal.
One Twitter user remarked “It’s appalling how long this cover up could have carried on”, while another said “clean out the entire company! Toshiba needs to carry on its legacy properly.”
He also said it was the most damaging episode in Toshiba’s 140-year history. The company was created by a merger in 1938, but its roots date back to 1875.
Toshiba will have to restate its profits for the period between April 2008 and March 2014. It is unclear whether it will affect the company’s results for the year ending March 2015.
The finance minister, Taro Aso, said the case could undermine confidence in corporate governance in Japan.
Wee Teck Loo, head of consumer electronics research at market research firm Euromonitor said Toshiba’s struggles highlighted the problems that have plagued many Japanese tech firms in recent years.
“With the exception of cameras, Japanese firms are no longer able to compete effectively with the likes of companies like Samsung and Lenovo,” he said.
“Even without the scandals, these tech firms are already losing its competitiveness against its Korean and Chinese competitors.”
And whether Toshiba can bounce back from the probe is up for debate, according to analysts.
Mr Nakamura of IDC said even though it faces a class action lawsuit in the US, Toshiba’s computers, heavy industry and semi-conductor businesses are strong and profitable.
“A new leader and governance structure will renovate the company,” he said.