Nigel Doughty says his decision to step down as Nottingham Forest chairman was the honourable thing to do following manager Steve McClaren's resignation.
McClaren quit after Sunday's loss to Birmingham City - a result which leaves Forest a point above the drop zone.
Doughty told BBC Radio Nottingham: "It was a very poor decision on my behalf to appoint him.
"I felt it was appropriate I take some responsibility and am stepping down as well as soon as we find a replacement."
Doughty sacked Billy Davies as boss in the summer and appointed the former England manager in June.
But McClaren, whose side lost six of their 10 Championship games this season, had become increasingly dissatisfied at what he perceived as a lack of ambition by the City Ground hierarchy.
Nine players left in the summer - including loan players whose deals were not extended.
Coming the other way, Clint Hill became the sixth new face when he joined on a loan deal from from QPR last month but BBC Sport understands McClaren expected much greater backing in the transfer market, and said that the "parameters have changed" since his appointment.
Doughty added: "It has obviously not worked out. It has just been a bad decision in every way, shape and form - both for Steve McClaren and myself.
"We accepted his resignation. There is no compensation package or anything like that, we just shook hands and separated.
"We should have been more thorough when we appointed Steve and I felt that it was just a bad decision all round.
"I am very upset and cut up about it."
Doughty, who has been Forest chairman for 10 years, says the club must be mindful of the impending Financial Fair Play regulations which mean clubs will soon have to follow much stricter rules on how they are financed.
And Uefa's plans have seen Doughty tighten the purse strings to ensure the club are properly prepared.
He added: "It has been my club for 50 years, I will support it as we go through Financial Fair Play.
"Hopefully we can go forward under a new regime and new leadership - both on and off the pitch."
But Doughty insists he will have nothing to do with the new managerial appointment - despite staying on as the club's owner - and defended that stance.
He said: "It will a be a group of people at the football club - Mark Arthur [chief executive], Keith Burt [director of recruitment and scouting], some of the coaches who remain but I don't know quite honestly. As I have no involvement I don't know so I am just guessing.
"I am the owner of lots of businesses and I don't make operational decisions in those business as well. I make strategic decisions in terms of resource allocation and those sort of things.
"But I don't get involved in the operations day to day. It's normally better to leave that to people whose job it was.
"It was my personal decision to appoint Steve McClaren and that's why I am going. I don't want to compound the error."
Doughty, who saved the Reds from administration when he bought the club for £11m in 1999, did allay fears that he would be withdrawing his financial backing.
The life-long Forest fan has invested almost £100m of his personal fortune into the club - and estimates put his yearly outlay to ensure Forest continue to survive at about £12m.
But he told BBC Radio Nottingham he does not expect to get any of that money back, despite all but the initial £11m being in the form of loans.
"I have said on a number of occasions I have always been happy to support the club on a financial basis," he insisted.
"That will be diluted over the years as Financial Fair Play comes into implementation. My operational involvement will obviously be nil going forwards and my financial involvement will reduce dramatically over the next few years."