DETERMINANT OF CORPORATE GOVERNANCE IMPLEMENTATION QUALITY IN INDONESIA (Study of Firms Rated by The Indonesian Institute for Corporate Governance)

Abstract

The  purpose  of  this  study  is   to find  empirical  evidence whether some variables may affect the quality of corporate governance implementation. This study uses eight independent variables and Corporate Governance Perception Index as dependent variable. The sample used in this research are 189 Indonesian firms rated by the Indonesian Institute for Corporate Governance in the period of 2001-2012 and they must be listed in the IDX. The samples are selected by  using  nonprobability  random  sampling  (purposive  sampling method). This study gives empirical evidence that implementation quality of corporate governance are affected by five variables, the sequencely are the quality of external auditor, regulation factor, firm size, the proportion of independent commissioners board, and profitability. This study enhances some theories related to corporate governance, namely agency theory, agency theory type II, and pecking order theory.

Keywords  :    Corporate Governance Perception Index, Corporate Governance Implementation, Quality of External Auditor, Regulation, Firm Size, Proportion of Board of Independent Commissioners, Profitability, Leverage, Ownership Concentration, Investment Opportunity Set