Indonesia as one of developing countries should prepare for intense business competition in international market by continuously improving their firm value. Enhancement of firm value can be achieved if companies build synergic relationship between stakeholders. Implementation of corporate governance is believed can assist companies in improving firm value by minimizing cost and maximize companies’ profit.
This study aims to investigate the effect of corporate governance implementation on Indonesian companies. Corporate Governance Perception Index (CGPI) which establish by Indonesian Institute of Corporate Governance (IICG) used as proxy for corporate governance implementation, and Tobin’s q used as proxy for firm value. All the data obtain from Indonesia Stock Exchange (IDX) database and 2008 to 2012 used as observation period. The result show that implementation of corporate governance is positively correlated with firm value. This study also concludes that market will be more concern on CGPI which generated through self-assessment and observation indicators than the others indicators. This indicates that market would trust the information which comes from internal parties if that supported by sufficient evidence and from external parties that comes from independent parties. The result will be useful for investor in making their investment decision which based on firm value consideration.
