This document provides an introduction and background to a study on the impact of corporate governance on the quadruple bottom line (QBL) of firm performance within Malaysian oil and gas companies. The study aims to determine the impact of board audit committee practices on the four elements of QBL (people, planet, profit, innovation), and examine whether implementing QBL mediates the relationship between board practices and firm performance. The methodology will analyze secondary data from annual reports of Malaysian companies listed on Bursa Malaysia over 2008-2016. The significance is that it contributes new insights on the role of board audit committees and innovation in achieving sustainability in the oil and gas industry.

1. CORPORATE GOVERNANCE
IMPACT ON THE
QUADRUPLE BOTTOM-LINE
(QBL) TOWARDS FIRM
PERFORMANCE WITHIN THE
MALAYSIAN OIL AND GAS
PLCS
DAYANA MASTURA
BAHARUDIN

2. INTRODUCTION
• AROUND TWO DECADES HAVE PASSED SINCE THE EARTH SUMMIT OF 1992
WAS HELD IN RIO DE JANEIRO WHERE THE COUNTRIES ADOPTED ‘AGENDA 21’
I.E. A PROPOSAL TO ENSURE SOCIAL EQUI-TY, BOOST ECONOMIC GROWTH
AND ENSURE ENVIRONMENTAL PRO-TECTION (UNSD, 1992).
• THIS WAS ALSO THE FIRST TIME WHEN THE LIFESTYLE OF THE CURRENT
CIVILIZATION WAS ASSESSED AND THE NEED FOR CHANGE IN THE
PRODUCTION AND CONSUMPTION PATTERN WAS PROPOSED. THE SAME WAS
FOLLOWED BY UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE
CHANGE (UNFCCC) IN 1994.
• ADOPTED AT RIO CONVENTION, UN-FCCC ASPIRED TO PREVENT THE
DANGEROUS HUMAN INTERFER-ENCE WITH THE CLIMATE. THE ULTIMATE
OBJECTIVE OF THE CON-VENTION WAS TO STABILIZE GREEN-HOUSE GAS
CONCENTRATIONS AND PREVENT HAZARDOUS HUMAN INDUCED CLIMATE
CHANGE (TO BE ACHIEVED WITHIN A TIME FRAME SUFFICIENT TO ALLOW
ECO-SYSTEMS TO ADAPT NATURALLY), TO ENSURE FOOD PRODUCTION IS
NOT THREATENED AND ENABLE SUSTAINABLE ECONOMIC DEVEL-OPMENT.

3. OIL AND GAS INDUSTRY
GOVERNANCE
• IN THE WAKE OF THE RISE IN UNCONVENTIONAL GASES AND THE GULF OF MEXICO
DISASTER, SUSTAINABILITY HAS BECOME THE NEED OF THE HOUR.
• IT IS FOR THE SAME REASON THAT ORGANIZA-TIONS LIKE INTERNATIONAL PETROLEUM
INDUSTRY ENVIRONMENTAL CONSERVATION ASSOCIATION (IPIECA), AMERICAN PETROLEUM
INSTITUTE (API) AND THE INTERNATIONAL ASSOCIATION OF OIL AND GAS PRODUCERS
(OGP) RECOGNIZE THE IMPORTANCE OF MANAGING SUSTAINABILITY IN THE ENERGY
SECTOR AND ENCOUR-AGE THEIR MEMBER COMPANIES TO COMMUNICATE WITH THEIR
STAKEHOLDERSTHE ECONOMIC, ENVIRONMENTAL, GOVERNANCE AND SOCIAL IMPACTS OF
THEIR BUSINESSES IN THE FORM OF ‘VOLUNTARY SUSTAINABILITY REPORTS’ FOR THE SAKE
OF TRANS-PARENCY AND DISASTER MANAGEMENT.
• AS NEW CONVENTIONAL OIL AND GAS SOURCES DECLINE, UNCON-VENTIONAL SOURCES,
INCLUDING SHALE GAS IN THE US, OIL SANDS IN CANADA, COAL SEAM GAS IN AUSTRALIA,
AND DEEP-WATER OFFSHORE WELLS IN BRAZIL, WEST AFRICA AND ASIA HAVE BEEN
IDENTIFIED AS KEY AREAS WITH SIGNIFICANT RESERVES POTENTIAL. DESPITE THE GROWTH
POTENTIAL, SUSTAINABILITY RISKS SUCH AS CLIMATE CHANGE, SAFETY RISKS, AND
COMMUNITY DISAGREE-MENTS EXERT PRESSURE ON THE ECONOMIC FEASIBILITY OF THESE
OPPORTUNITIES [1].

4. PROBLEM
STATEMENT
• CORPORATE SCANDALS IN THE PAST HAVE
AFFECTED THE ORGANIZA-TIONS, INDUSTRY,
EMPLOYEES’ WELFARE STATE AND THE
COUNTRY’S ECONOMY ADVERSELY LEADING TO
AN OVERALL UNSUSTAINABLE ECONOMIC AND
SOCIAL LANDSCAPE.
• ENRON AND WORLDCOM COLLAPSES IN 2002
RESULTED IN THE TOTAL CLOSURE OF THE
ORGANIZATION IN THE US TOGETHER WITH
BRANCHES OVERSEAS, LOSS OF EMPLOYMENT,
LOSS OF EMPLOYEE PENSION FUND WHICH
EVENTUALLY LEAD TO THE GLOBAL FINANCIAL
CRISIS IN 2007-2008.
• THE EXTERNAL AUDITOR OF ENRON AND
WORLDCOM WHICH WAS ARTHUR ANDERSEN
LOST ITS GOOD REPUTATION AND WAS
CHARGED FOR MALPRACTICE AND WAS CLOSED
DOWN AS WELL IN THE US TOGETHER WITH ITS
WORLDWIDE BRANCHES REDUCING THE BIG-5
MULTINATIONAL AUDIT FIRM TO BIG-4 WHICH
ARE PWC, KPMG, DELOITTE AND EY.

5. PROBLEM
STATEMENT
• PREVIOUS LITERATURE HAVE NOT
DISCUSSED ON HOW THE BOARD
AUDIT COMMITTEE CAN HAVE A
POSITIVE IMPACT ON THE
QUADRUPLE BOTTOM-LINE OF AN
OIL AND GAS PLC IN MALAYSIA,
TOWARDS ACHIEVING
PERFORMANCE.
• PREVIOUS LITERATURE HAVE
ONLY DISCUSSED THE TRIPLE
BOTTOM-LINE WITHIN THE OIL
AND GAS INDUSTRY BUT HAVE
NOT DELIBERATED ON ALL THREE
ASPECTS; PEOPLE, PLANET AND
PROFIT TOGETH-ER WITHIN ONE
RESEARCH.

6. PROBLEM
STATEMENT
• PAST LITERATURE ON THE QBL IN THE OIL
AND GAS INDUSTRY IS CENTERED ON
CANADA’S OIL SANDS MARKETS WHICH
ARE SUFFER-ING FROM UNCERTAIN
DEMAND COUPLED WITH HIGH
TECHNOLOGICAL COST.
• THE MALAYSIAN OIL AND GAS INDUSTRY
SUFFERS THE SAME FATE AS ITS GLOBAL
COUNTERPARTS WHO ARE HIGHLY
DEPENDENT ON THE PRICE VOLATILITY TO
ENABLE IT TO SUSTAIN FOR MANY YEARS
OR TO COLLAPSE INDEFINITELY IN WHICH
THIS RESEARCH WILL DISCUSS ON THE
FUNCTIONS OF QBL AND BOARD AUDIT
COMMITTEE AS POSSIBLE PATHWAYS TO
REMAIN SUSTAINABLE INTO THE
UNCERTAIN FUTURE.

7. RESEARCH OBJECTIVES
To determine the impact of
Board Audit Committee
practices on the four
elements of Quadruple
Bottom-Line (QBL).
To determine the impact of
the four elements of the
Quadruple Bottom-Line will
have an impact on firm per-
formance.
To examine if the presence
of Board Audit Committee
practices will have an impact
on firm performance.
To investigate if the four
elements of Quadruple Bot-
tom-Line mediates the
relationship between Board
Audit Committee practices
and firm performance.

8. RESEARCH QUESTIONS
What is the level of
impact of Board
Audit Committee
practices on the
four elements of
the Quadruple
Bottom-Line?
What is the level of
impact of the four
elements of the
Quadruple
Bottom-Line on
firm performance?
How will the
presence of Board
Audit Committee
prac-tices have an
impact on firm
performance?
How will the four
elements of the
Quadruple
Bottom-Line
mediate the
relationship
between the Board
Audit Committee
practices and firm
performance?

9. LITERATU
RE
REVIEW
• REVIEW OF EXISTING LITERATURE REVEALS THAT AGENCY
THEORY (JENSEN AND MECKLING 1976) AND STAKEHOLDER
THEORY (FREEMAN 1984) ARE THE TWO DOMINANT
PERSPECTIVES USED TO EXPLAIN THE RELATIONSHIP BETWEEN
GOVERNANCE AND SUS-TAINABILITY PERFORMANCE (SP).
AGENCY THEORY EXPLAINS THE CONFLICTING RELATIONSHIP
BETWEEN MANAGERS AND STAKEHOLD-ERS ASSUMING THE
PRESENCE OF INFORMATION ASYMMETRY, OPPORTUNISTIC
BEHAVIOUR OF AGENTS, AND CONFLICTS OF INTER-ESTS
BETWEEN PRINCIPAL (SHAREHOLDER) AND AGENT (MANAGER).
THEREFORE, IT IS DESIRABLE TO MONITOR THE AGENTS
CLOSELY IN ORDER TO ALIGN THE PRINCIPAL–AGENT GOALS,
REDUCE CONFLICTS, AND MAXIMISE THE WEALTH OF
STOCKHOLDERS (HALME AND HUSE 1997).
• AGENCY THEORY CONTENDS THAT EFFECTIVE CORPORATE
GOVERN-ANCE (CG) IMPROVES FIRM’S CAPABILITY TO DEAL
WITH EMERG-ING CHALLENGES AND REDUCE THE AGENCY
CONFLICTS (HANIFFA AND COOKE 2002).

10. CONCEPTUAL FRAMEWORK

11. PROPOSED
REGRESSIO
N MODELS
• RESEARCH OBJECTIVE 1 AND RESEARCH QUESTION 1
• QBL = Β0 + Β1BAC + Β2 SIZE + Β3 PROFIT + Β4 LEV + Β5 BSZE + Β6
INDMY + Ε
• RESEARCH OBJECTIVE 2 AND RESEARCH QUESTION
• FP = Β0 + Β1QBL + Β2SIZE + Β3PROFIT + Β4BLEV + Β5BSZE + Β6 INDMY
+ Ε
• RESEARCH OBJECTIVE 3 AND RESEARCH QUESTION 3
• FP = Β0 + Β1BAC + Β2SIZE + Β3PROFIT + Β4BLEV + Β5BSZE + Β6 INDMY
+ Ε
• RESEARCH OBJECTIVE 4 AND RESEARCH QUESTION 4
• FP = Β0 + Β1BAC + Β2 QBL (PPL) + Β3 QBL (PLN) + Β4 QBL (PROSP) + Β5
QBL (INNOV) + Β6 SIZE + Β7 PROFIT + Β8 LEV + Β9 BSZE + Β10 INDMY
+ Ε

12. SCOPE AND
METHODOLOG
Y OF THE
STUDY
• THE SAMPLE FOR THIS STUDY WILL INCLUDE ONLY
NON-FINANCIAL COMPANIES LISTED UNDER THE
MAIN MARKET OF BURSA MALAY-SIA FOR A
PERIOD OF EIGHT YEARS (2008 – 2016). YEAR
2008 WAS CHOSEN AS 2008 WAS THE YEAR OF
THE GLOBAL FINANCIAL CRISIS, IN WHICH AFTER
THAT, THE ECONOMIC CYCLE WAS SHORTER AND
UNPREDICTABLE COMPARED TO BEFORE YEAR
2008.
• SECONDARY DATA WILL BE OBTAINED FROM THE
ANNUAL REPORTS, SUSTAINABILITY REPORTS,
CORPORATE SOCIAL RESPONSIBILITY REPORTS
AND CORPORATE CITIZENSHIP REPORTS OF THE
PUBLIC LISTED COMPANIES IN MALAYSIA VIA
STRATIFIED RANDOM SAM-PLING.

13. SIGNIFICAN
CE OF
STUDY
Even though there is various literatures on Triple Bottom Line, the
area of Quadruple Bottom-Line is still not re-searched at great
lengths in the context of the Malaysian oil and gas industry. This
study hopes to contribute in terms of the fourth bottom-line which
is Innovation, an essential element for oil and gas companies to
practice in order to survive in the uncertain future couples with a
volatile nature of industry.
Another contribution would be in terms of the role of the Board
Audit Committee in vetting through the practices and disclosures of
the Triple Bottom-Line (people, planet and profit) including the
innovation element which are not researched and discussed
thoroughly in the context of the Malaysian oil and gas industry.

14. RECOMMENDATION
S FOR FUTURE
RESEARCH
• FURTHER SUGGESTIONS FOR FUTURE RESEARCH
COULD BE THE USE OF OTHER CG ELEMENTS SUCH
AS THE ROLE OF BOARD RISK AND NOMINATION
COMMITTEES COULD BE AN INTERESTING
RESEARCH QUESTION AND TO INVESTIGATE ITS
IMPACT ON THE TRIPLE BOTTOM-LINE AS WELL AS
THE QUADRUPLE BOTTOM-LINE.