T This study examines the relationship between corporate governance and discloure. This study employs a simultaneous equation model to test the hypothesis that corporate governance and disclosure are positively related. The rating of corporate governance perception index (CGPI) for 2001 and 2002 by the Indonesian Institute for Corporate Governance is used to measure disclosure index. Consistent with theoretical predictions, the analysis shows that there is a significant positive relationship between corporate governance index and disclosure level. Corporate governance and disclosure are instruments to protect investors from potential losses due to unfavorable management decisions. Thus, firms with higher corporate governance index tend to disclosure more information in annual report than the firms with lower corporate governance index, and vice versa.