12 especially in psychology and sociology with emphasis on the
importance of the socialization process in influencing the compliance behavior of an individual Sulistyo 2010. According to Saleh and
Susilowati 2004 in Sulistyo 2010 there are two basic perspectives on law compliance in the instrumental and normative. Instrumental
perspective assumes the individual as a whole is driven by self-interest and responses to changing incentives, and penalties associated with
the behavior. Normative Perspectives in touch with what people consider being moral and contrary to their personal interests.
An individual tends to obey the laws that they deem appropriate and consistent with the internal norms. Normative commitment
through morality means obeying law because the law is regarded as a necessity, whereas normative commitment legitimacy through means
comply with the authorities making up the law has the right to dictate behavior Sudaryanti 2008 in Sulistyo 2010.
Compliance theory can lead people better to comply with current regulations, as well as companies are trying to submit financial report
on time because in addition to being a companys obligation to submit financial report on time, will also be very beneficial for the users of
financial report. Requirement for compliance with timeliness in the submission of
the annual financial report of public companies in Indonesia have been set by Bapepam Regulation No. X.K.6, through Decree No. Kep-
13 134BL2006 head of Bapepam and LK concerning Obligation to
Submit Periodic Financial Report. Such regulations are legally indicate the existence of any compliance behavior of individuals and
organizations involved in the Indonesian capital market to submit the companys annual financial report on time to Bapepam.
3. Corporate Governance
Corporate governance is a term that over the last two decades has become popular literature. The term governance derives from the
Latin gubernare, meaning to steer, usually applying to the steering of a ship, which implies that corporate governance involves the function of
direction rather than control Cadbury Report 1992. Talamo 2011 explains that the corporate governance in the traditional definition is
considered as a cornerstone of ethical conduct within accounting practices such as the integrity and objectivity of accountants and
auditors. Shleifer and Vishny 1989 propose a broad definition of
corporate governance: corporate governance concerns the ways in which suppliers of funds and the corporations themselves ensure
returns on investment. Using a similar approach, Picou and Rubach 2006 define corporate governance as the construction of rules,
practices, and incentives to align effectively the interests of the agents boards and managers with those of the principals capital suppliers.
According to Lashgari 2004, corporate governance is
14 concerned with managing the relationship among various corporate
stakeholders. Corporate governance is a concept to increase company performance through supervising or monitoring management
performance and guarantee management accountability to stakeholder based on rule’s framework.
The main objective of corporate governance is to achieve a company management transparency for the users of financial statement
Yonnedi and Sari 2009. If the company could implement this concept so the economics growth could keep on going well together with
company management transparency that is also going well and give benefit for many sides.
In formulating corporate governance, there are many countries, including Indonesia, that refer to OECD Organization for Economic
Co-operation and Development. OECD reveals a corporate governance structure and its relation of accountability among the
involved parties consisting of shareholders, board members, commissioners, and managers. It designed to encourage the creation of
a competitive performance and to reach the main objectives of the company.
Corporate governance has been strongly influenced by corporate ownership structure. Meanwhile, there are many other factors affecting
corporate governance such as legal system, cultural and religious tradition, political stability and economic event. The global financial
