The auto giant said in a statement on Monday that "over many years" Ghosn and board director Greg Kelly had been under-reporting compensation amounts to the Tokyo Stock Exchange securities report.
Nissan added that, with regard to Ghosn, "numerous other significant acts of misconduct have been uncovered, such as personal use of company assets." The company said Ghosn had also made inappropriate investments.
In a press conference Monday, Nissan Chief Executive Hiroto Saikawa, said both men had been arrested and this Thursday he would propose to the Nissan Board of Directors to remove them from their roles.
Ghosn is also chairman and CEO of the strategic alliance between French automaker Renault, Nissan and Mitsubishi Motors. Mitsubishi Motors shares were down 6.85 percent.
The broader Japanese market also declined, with the benchmark Nikkei 225 down 1.09 percent to close at 21,583.12 and the Topix index lower by 0.73 percent to 1,625.67. In South Korea, the Kospi slipped 0.86 percent to close at 2,082.58.
The mainland Chinese markets were also lower on the day. The Shanghai composite fell 2.13 percent to close at around 2,645.85 while the Shenzhen composite shed 2.717 percent to 1,378.92. Hong Kong's Hang Seng index declined 1.94 percent in late-afternoon trade.
Australia's ASX 200 was down 0.38 percent to close at 5,671.8, with almost all sectors in negative territory.
Dow falls almost 400 points overnight
The popular "FAANG" trade made up of Facebook, Amazon, Apple, Netflix and Alphabet is now in a bear market with each member down more than 20 percent from their one-year highs.
Tech shares also fell after The Financial Times reported Chinese authorities have alleged "massive evidence" of antitrust violations by Samsung, SK Hynix and Micron Technology. The report also said China would deepen its investigation into the three companies, which are the largest memory-chip manufacturers in the world.
Shares of Samsung Electronics fell 1.95 percent on Tuesday while SK Hynix shares were down 3.30 percent.
The Japanese yen, widely viewed as a safe haven currency, was at 112.47 against the dollar after seeing lows around the 112.8 handle yesterday. The Australian dollar traded at $0.7284 after seeing an earlier high of $0.7300.
— CNBC's Fred Imbert and David Reid contributed to this report