Shares in Japanese camera and precision equipment maker Olympus dived 24 percent Monday, hitting a more than two-year low as the abrupt demotion of its first non-Japanese CEO clouded its outlook.
The heavy selloff sent the stock to its lowest closing level since April 2009 as the ouster darkened prospects for the Japanese company's earnings, analysts said.
Olympus shares closed down 23.96 percent to 1,555 yen.
The loss followed an 18 percent drop on Friday on the news that the company had stripped its first ever non-Japanese president and chief executive of his titles and demoted him to to the post of director without executive authority.
Olympus said it had demoted Briton Michael Woodford over "a big gap" between him and other board directors on company management and strategy.
An equity strategist at a Japanese brokerage said foreign investors likely drove the selling.
Uncertainty rose after Woodford said in an interview with the Wall Street Journal on Saturday that his ouster was prompted by letters he wrote to the company chairman raising questions about the prices and advisory fees paid in a series of acquisitions between 2006 and 2008.
Questions were also raised about Olympus's 2008 acquisition of UK medical-instruments company Gyrus Group Ltd, in particular the premium paid by Olympus over the trading price shortly before the deal was announced.
"If it's just a CEO resignation, we can expect a rebound in shares. But it's difficult to invest in this stock now since we don't know what's going to come out from here," said Toshiyuki Kanayama, a senior market analyst at Monex Inc.
Nomura Securities cut its rating on Olympus to Neutral from Buy and slashed its target share price to 2,000 yen from 3,300 yen.
"With the firing of Mr. Woodford, who had been a strong proponent of cost-cutting, we no longer have any expectations of earnings improvement resulting from bold cost reductions" in fiscal 2012 onward, Nomura analyst Motoya Kohtani wrote in a client note.
Public boardroom spats are extremely rare in Japan, but all the more virulent when they emerge.
The move to dismiss Woodford was also surprising because two weeks ago, Olympus said "the board have been extremely pleased with the progress made under Mr Woodford's leadership," in comments just six months after his appointment as president.
Woodford said in the Journal interview that as president and CEO of Olympus he wrote to the company's chairman urging him to resign over "serious governance concerns" and asked for a meeting last Friday.
But when the British executive arrived at that emergency board meeting, Chairman Tsuyoshi Kikukawa told the group that Woodford had "a conflict of interest" and wouldn't be allowed to speak, Woodford told the newspaper.
Instead of Kikukawa stepping down, the directors stripped Woodford of his executive positions.
"These questions I raised have to be answered. . .for the sake of Olympus," Woodford said.