Updated with statement by James Murdoch

NEW YORK ( TheStreet) -- News Corp's ( NWSA - Get Report) U.K. tabloid News of the World will be shutting down amid a hacking scandal.

The last issue for the newspaper will be Sunday and will not carry any ads.

The news comes on the heels of a plethora of phone-hacking allegations surrounding the 168-year-old newspaper.

>Click here to take our poll on whether News Corp. is still a buy.

James Murdoch, deputy chief operating officer of News Corp. and chairman of News International, made the announcement of the newspaper's closure.

"I have important things to say about the News of the World and the steps we are taking to address the very serious problems that have occurred," he said in a statement. "The good things the News of the World does, however, have been sullied by behaviour that was wrong. Indeed, if recent allegations are true, it was inhuman and has no place in our company."

Investors are reacting favorable to the news, as fears emerged this week that the scandal surrounding the paper would pressure Rupert Murdoch's media conglomerate.

Shares of News Corp. rose nearly 2% following the announcement.

-- Reported by Jeanine Poggi in New York.

Follow TheStreet.com on Twitter and become a fan on Facebook.