Toshiba’s boss has quit the Japanese conglomerate over a 152bn yen (£780m) accounting scandal that the government said threatened to undermine investors’ confidence in the country. Hisao Tanaka, the company’s president and chief executive, will be replaced by Toshiba’s chairman, Masashi Muromachi, until a new chief executive is found. Tanaka’s predecessors, Norio Sasaki, who is vice-chairman, and Atsutoshi Nishida, who is an adviser to the company, will also leave.

Toshiba overstated its operating profits over several years in accounting irregularities involving its top management, an independent panel of accountants and lawyers said on Monday.

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Tanaka and Sasaki knew about the profit overstatement and created a pressurised corporate culture that prompted business heads to manipulate figures to meet targets, the investigators said in their report.

At a news conference on Tuesday, Tanaka said he did not tell anyone to falsify accounts but that he would take responsibility for the investigators’ findings at a company that is regarded as one of the emblems of Japan’s industrial prowess. “I see this as the most damaging event for our brand in the company’s 140-year history,” Tanaka said after making a ritual deep bow of contrition while cameras whirred and flashed. “I don’t think these problems can be overcome overnight.”

Tanaka and Sasaki originally intended to resign in the coming months, but their ousting was announced soon after a government minister said the scandal could damage international confidence in Japanese business.

Facebook Twitter Pinterest Hisao Tanaka, centre, with the chairman, Masashi Muromachi, left, and and executive vice president, Keizo Maeda, bow at the news conference in Tokyo. Photograph: Thomas Peter/Reuters

The Japanese finance minister, Taro Aso, said: “If [Japan] fails to implement appropriate corporate governance, it could lose the market’s trust. It’s very regrettable.”

Japan has been trying to demonstrate improved corporate governance after it was revealed in late 2011 that Olympus, another of the country’s biggest names, had hidden $1.7bn (£1.1bn) of losses over 13 years. The country still lags behind the UK and the US on the openness of its company reporting and the independence of boards of directors. In the UK, it would be highly unusual for two former chief executives to retain influence at a big company.

Loizos Heracleous, a professor at Warwick Business School, said: “The Toshiba scandal will be seen in the context of the Olympus event, with investors wondering whether there is a pattern of account manipulation in corporate behaviour, and observing much more closely. Japanese regulatory authorities will need to reassure the markets that they are casting a watchful eye over Japanese corporations, and also that Japanese corporate culture is moving towards global expectations with respect to robustness of corporate governance.”

In total, eight company officials resigned following the report, and Tanaka said Toshiba is now considering recruiting outside directors for more than half its board seats.

Improper accounting at Toshiba included overstatements and booking profits early or pushing back the recording of losses or charges. Those actions often resulted in still higher targets being set for business divisions in the following period. “This led to a need to carry out improper accounting on an even bigger scale, and as this was repeated, the scale of the inappropriate bookkeeping also expanded,” the investigators’ report said.

If [Japan] fails to implement appropriate corporate governance, it could lose the market’s trust. It’s very regrettable Taro Aso, finance minister

Toshiba, whose products range from laptops and televisions to nuclear power plants and railway systems, is one of the fixtures of the Japanese corporate scene.

Despite its shares losing almost a quarter of their value since the irregularities surfaced in April, it is still Japan’s 10th biggest company by market value. It was created by a merger in 1938 but its roots date back to 1875 and it was one of the companies that turned Japan into an industrial power.

Koichi Ueda, a lawyer who headed the investigating panel, said: “[For] a company that represents Japan to be doing something like this institutionally was shocking.”

One of the investigators’ early theories was that top managers set unrealistic targets for new operations because they were worried about the impact of the 2011 Fukushima disaster on Toshiba’s nuclear division.

The report did not mention Fukushima but it said pressure within Toshiba was particularly strong in the accounting years 2011 and 2012.

The report said much of the improper accounting, which stretched back to 2008, was intentional and would have been difficult for auditors to detect. Toshiba will have to restate its accounts and could face big fines.

Shares in Toshiba rose 6% on Tuesday on relief the report did not contain worse findings. Standard & Poor’s, the rating agency, said the required restatement of Toshiba’s profit could lead to its credit rating being downgraded.