Arthur Andersen chief executive Mr Joseph Berardino has resigned, bowing to mounting pressure as a result of the accounting firm's role in the Enron scandal.
His announcement comes four days after former Federal Reserve chairman Mr Paul Volcker urged Andersen's top management to step aside.
He wants to install and head an independent board in a last-ditch plan to save the company.
Mr Berardino disclosed his decision as Andersen's US partners, in internal company e-mails, were increasingly urging him to quit.
He said he will remain in charge until a successor is chosen as managing partner and CEO of Andersen Worldwide, which includes Arthur Andersen LLP, the accounting firm's US business.
"In the wake of an unprecedented criminal indictment of the US firm, I have concluded that my continuing as Worldwide CEO could become an impediment to the efforts of Mr Volcker and many others to save the US firm," he said in a statement.
"While my nature is to keep fighting to protect our people and our clients, the fact is that the improper shredding of documents took place on my watch - and I believe it is now in the best interests of the firm for me to step down from the CEO position."
The firm suffered another blow yesterday as the Securities and Exchange Commission said in a court filing that Andersen was involved in a scheme that allowed former executives of Waste Management Inc. to inflate earnings by $1.7 billion.
PA