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principal investor that funds invested are used appropriately and efficiently. In addition to corporate governance, the company provides assurance that the
management agent acts in the best interest of the company. The Decree of Minister of State Head of Investment and Development of
SOE No. 23 M-PM.PBUMN 2000 on the development of corporate governance practices in the Company Persero, identifies that GCG is a healthy corporate
principles to be applied in the management of the company that carried out solely in order to maintain the companys interests in order to achieve the aims and
objectives of the company. Peter and John 2005 defined corporate governance as a set of provisions that enable the stockholders by exercising voting power to
compel those in operating control of the firm to respect their interests. Based on those definitions, it can be concluded that GCG is a system that regulate, manage,
and control the effort to increase the value of company, as well as a form of attention for shareholders, creditors, and society.
The application of corporate governance provide four benefits FCGI,
2001, namely: 1 improve corporate performance through the creation process of
making better decisions, improve the companys efficiency, and further increase service to stakeholders, 2 facilitate obtaining the funds finance cheaper and not
rigid because the trust factor that will eventually increase corporate value, 3 restore the confidence of investors invest in Indonesia, and 4 the shareholders
will be satisfied with as well as the performance of the company will increase shareholders values and dividend.
Based on Forum for Corporate Governance in Indonesia FCGI, GCG mechanisms can be measured through the number of institutional ownership,
independent commissioner, audit committee, and managerial ownership. Institutional ownership is shareholding of the company owned by the institution
such as insurance companies, banks, investment companies and others Tarjo, 2008. Institutional ownership has significant importance in monitoring the
management because it will encourage more optimal supervision. Independent commissioner is member of board of directors who are not affiliated with the
Board of Directors, other board members, and controlling shareholders, as well as
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free of business relationship or other relationship which could affect its ability to act independently or act solely in the interests of the company Regulation number
40 year 2007 regarding Private Limited Company. Audit committee is a group of people chosen by the larger group that is responsible to assist the auditor in
maintaining their independence from management Tugiman, 1995:8. Managerial
ownership is ownership by the management of the company, as measured by the percentage of the number of shares owned by management Sujono , 2007.
2.1.6 Company’s Value
The companys main purpose is to increase the company’s value through
increasing the prosperity of the owner or shareholders Wahidawati, 2002. Company’s value is very important because the high value of the company will be
followed by high prosperity of shareholders Brigham and Gapenski, 1996:22. The value of a company is reflected in its market value of shares. There are
several ratios to measure the market value of companies, one of which is Tobins Q. Tobins Q ratio assessed can provide best information, because in Tobins Q
include all elements of debt and company equity Tri, 2015. According to White
et al. 2002 Tobins Q can be formulated as follows:
D EBV
D EMV
Q
Description: Q
= Company’s value
EMV = Equity Market Value, obtained by multiplying the closing price of shares at the end of the year with the number of outstanding shares at
the end of the year EBV = Equity book value, which is derived from the difference between
total assets of the company with total liabilities D
= The book value of total debt
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2.2 Previous Studies
