Shares of Nissan Motor Co fell 6 per cent early on Tuesday, a day after the arrest of Chairman Carlos Ghosn sent shockwaves through the business world and threw into doubt the future of Japan's No.2 automaker and its global alliance.
Nissan said on Monday Ghosn was arrested for alleged financial misconduct and would be fired from the board this week. Ghosn is also chairman and chief executive of Nissan's French partner, Renault
Ousting Ghosn is bound to raise questions about an alliance that he personally shaped and had pledged to consolidate with a deeper tie-up, before eventually stepping back from its operational leadership.
Ghosn's alleged improprieties also raise questions over governance at the alliance in which the three partners' boards are all chaired by a single executive.
Speaking at a late-night news conference on Monday, Nissan CEO Hiroto Saikawa conceded that too much power had been concentrated on Ghosn, and that the implications of his stewardship of both Renault and Nissan had gone unquestioned since 2005.
Prosecutors said in a statement that Ghosn and Representative Director Greg Kelly conspired to understate Ghosn's compensation over five years starting in fiscal 2010 as being about half of the actual 9.998 billion yen ($88.9 million).
The Asahi newspaper cited unnamed sources as saying a company employee gave prosecutors information on Ghosn in return for lighter treatment, the second instance of a plea deal in Japan - a system introduced in June.
There has been no comment from Ghosn or Kelly on the allegations and Reuters could not contact them for comment.
Nissan shares fell to a low of 940 yen and were trading down 5.5 per cent at 950.7 yen.
Shares in Mitsubishi Motors Corp, another member of the Franco-Japanese partnership, also slid by about 6 per cent. Mitsubishi also said on Monday it would remove Ghosn as its chairman. Renault shares lost 8.4 per cent on Monday.