The chairman of Olympus resigned as the camera maker tried to draw a line under damaging allegations by its ousted chief executive, Michael Woodford.
Yet the Briton warned that the company's choice of successor would "just make things worse".
Another regulator has launched an investigation into the company's takeover activity, this time in its home market. Three of Olympus's largest shareholders have already called for an independent committee to scrutinise the $687m (£431m) in fees paid to a financial adviser on its purchase of the British medical group Gyrus. The fees, which are usually about 1 per cent of a transaction, were equivalent to a third of the deal price.
The Japanese company said that Tsuyoshi Kikukawa had quit as chairman, chief executive and president after a board meeting yesterday morning, although he will stay on as a director. His departure was prompted by stakeholder concerns over "the recent series of media reports and fall in the stock price", the company said.
Board member Shuichi Takayama, who joined Olympus in 1970, was appointed representative director and president in Mr Kikukawa's place.
Mr Woodford said that the latest twist was "bizarre", adding: "Kikukawa has stepped down for an existing board member who sees nothing wrong with the huge fees paid to the advisers on the Gyrus deal. This is just making a bad situation worse."
He said the decision to appoint Mr Takayama "insulted the intelligence" of those calling for change and that it was a, "ludicrous way to manage a major corporation". The company needed to "bring in a genuine outsider to replace Kikukawa, or reappoint myself," Mr Woodford added. "The appointment of a board member at the top does not take out the heat from the situation." He has previously pledged to return if the entire board is ousted.
Olympus's share price tumbled by a further 10 per cent yesterday after gaining on Tuesday. More than half of the value of the company has been lost since Mr Woodford, its first foreign boss, was fired a fortnight ago.