Toshiba's chief executive and vice-chairman have resigned in the wake of an independent report on the company's 152 billion yen ($1.2 billion) accounting scandal, which accused the management of padding profits. But, nonetheless the engineering giant's stock has surged more than 6 percent Tuesday.
After the market close, Toshiba said CEO Hisao Tanaka and Vice Chairman Norio Sasaki would resign, with Chairman Masashi Muromachi taking over as interim CEO.
Over several years, Toshiba's operating profit was inflated by around 152 billion yen, in an accounting scandal that involved the company's top management, including the current and previous chief executives, an independent review said in a report Monday. That's around three times the company's initial estimate, according to a Reuters report.
Getting the bad news out appears to have eased investors' concerns about the stock.
"The total problem has been quantified and there's a likely chance the CEO will have to quit. That's been seen as the end of that," said Amir Anvarzadeh, director of Japan equity sales at BGC Securities.
"We don't really see the attraction for Toshiba, but every stock has its price," he said, adding that Tuesday's rally was likely driven by short-covering, or investors covering their bets against the share.
The stock, which ended Tuesday up 6.1 at 399.9 yen, likely got another fillip from its sharp drop -- it's down still down around 20 percent since early April, when Toshiba first disclosed the investigation.
"They've been killed," Anvarzadeh said. "It has been massively oversold."