WPP, the world’s largest advertising agency, is investigating an allegation of personal misconduct against its chief executive, Sir Martin Sorrell.
The board of WPP said independent counsel will carry out the probe into the claim.
A statement from the company said: “The investigation is ongoing. The allegations do not involve amounts which are material to WPP.”
The matter is related to the possible misuse of company assets, according to the Wall Street Journal, which cited unnamed sources.
Sir Martin, 73, has been at the helm of WPP for more than three decades, having previously worked at Saatchi & Saatchi, and was knighted in the Queen’s New Year honours list in 2000.
In a statement issued by Project Associates on behalf of Sir Martin, he rejected the allegation of financial impropriety - but said he understood the company had to investigate it.
The statement added: “Reports in the media have stated that WPP is investigating an allegation of financial impropriety by me, specifically as to the use of company funds.
“I reject the allegation unreservedly but recognise that the company has to investigate it. I understand that this process will be completed shortly.
“Obviously, I shall play no part in the management of the investigation under way.”
Shares in WPP fell more than 3% shortly after the market opened as investors reacted to the news.
Ian Whittaker, analyst at Liberum, said the allegations could “intensify” speculation about the chief executive’s future at WPP.
“The accusations are bound to attract a lot of attention and, given he is the face of WPP to many, there is likely to be a negative impact on sentiment today.
“However, he has denied the claims, there has been no move to suspend him, so the way it is being handled does not suggest a major issue.
“One thing this may do is intensify talk about Sir Martin’s successor at WPP, which has been an issue lurking in the background.”