President and CEO Ola Rollén was detained on Saturday and will be held in custody for one week while the Norwegian economic crime authority gathers evidence for its case.
Shares for Hexagon, which makes precision measuring and positioning instruments, fell Monday morning when news of Rollén's arrest broke.
The company, however, said it was standing by its leader.
"Hexagon’s Board of Directors has full confidence in Ola Rollén and he will resume his position as CEO as soon as the detainment is ended," the company wrote in a press release posted on its website.
According to a statement from his lawyers, Rollén "firmly denies the accusations" and they allege that the case against him is based on an incorrect interpretation of the facts.
His lawyers wrote that the allegations stem from shares of the Norwegian company Next Biometrics ASA that were bought in October last year by Greenbridge Partners, a private equity firm founded and managed by Rollén.