STATE OWNERSHIP AND CORPORATE GOVERNANCE: AN EMPIRICAL STUDY OF STATE OWNED ENTERPRISES IN INDONESIA

State ownership is often referred to as state-owned companies that are owned by citizens and managed by government. In practice, the government are responsible for the provision of information related to financial management through financial statements. The information disclosed by the government can provide actual condition describing the quality of the management and performance of the SOEs. Hence, the role and duties of the legislative council as a competent authority are also needed to exercise the supervision over the financial management of SOEs in order to realize the implementation of Good Corporate Governance. Practically, Good Corporate Governance is briefly defined as a mechanism related to the value creation for shareholders. The principles contained in Good Corporate Governance can be the foundation that will be able to ensure the trust of shareholders and creditors alike. Thus, Good Corporate Governance requires a credible process and structure undertaken through company management ultimately capable of protecting the rights of all stakeholders (Butt & Hasan, 2009). Bhagat and Bolton (2008) find that Good Governance in terms of capital and ownership structures affects the performance of company.