TOKYO: Japan's Toshiba Corp said its chief executive was stepping down on Tuesday after an independent investigation found he had been aware the company had been inflating its profits over a number of years. CEO and President Hisao Tanaka will be replaced by Chairman Masashi Muromachi effective Wednesday, the company said in a statement, adding it was considering appointing outside directors to over half of its board seats. Tanaka's predecessors, Vice Chairman Norio Sasaki and adviser Atsutoshi Nishida, will also step down after the third-party report showed they also played a part in the overstatement of profits going back to the 2008 financial year. The report released on Monday said Toshiba had overstated its operating profit by 151.8 billion yen ($1.22 billion) over several years, roughly triple Toshiba's initial estimate. The findings are expected to lead to the restatement of earnings, a board overhaul and potentially hefty fines at the computers-to-nuclear conglomerate in Japan's worst corporate scandal since Olympus Corp was found to have covered up $1.7 billion in losses in late 2011. RISKS TO INVESTOR CONFIDENCE Japanese Finance Minister Taro Aso said earlier on Tuesday that the accounting irregularities at Toshiba were 'very regrettable', coming at a time when Japan is trying to regain global investors' confidence with better corporate governance. 'If (Japan) fails to implement appropriate corporate governance, it could lose the market's trust,' Aso told a news conference on Tuesday. 'It's very regrettable.' Aso declined to comment when asked if Toshiba would face any kind of financial penalty. Sources have said regulators were beginning their own review of Toshiba's book-keeping, based on Monday's report. The investigation came just as Prime Minister Shinzo Abe has implemented new guidelines to improve the country's corporate governance. Shares in Toshiba rose 6 percent on Tuesday on relief the report had few nasty surprises. But they are still down around 23 percent since Toshiba first disclosed cases of accounting irregularities in early April. 'Institutional investors and other long-term funds have already unloaded Toshiba shares, so currently the stock price is being driven by short-term investors,' said Takatoshi Itoshima, chief portfolio manager at Commons Asset Management. 'The bad news is out. As long as Toshiba won't be delisted, such trade will continue.'