i) Shareholder value maximization and social responsibility ideally should complement each other. Shareholder value maximization is only sustainable in the long term where there is a good social responsibility role performed by the organization or company. This will bring positive brand and goodwill to the organization and enhance company survival. It will make the company be acceptable in the community in which it operates. Meeting shareholder value maximization and the needs of the community are linked.

A company’s existence in the community provides employment, quality goods and services for consumption, welfare of the community, and also helps meet reasonable demands of the community. The company may find it difficult to survive when the community is hostile towards the company and its management. The two parties need each other for sustainability. (4 marks)

ii) Shareholder value maximization is long-term and sustainable to the shareholder than profit maximization, which might not necessarily lead to wealth maximization due to the following inherent challenges or disadvantages in accounting profit:

• Profit maximization is short-term.
• Creative accounting could be used to boost profits.
• Profits have no bearing on cash flow.
• Profit does not consider time value of money.
• It does not capture the risk of future cash flows. (3 marks)

iii) Non-financial objectives of companies or organizations include:

• Increase market share.
• Improve product quality.
• Employees welfare.
• Environmental protection.
• Lead in research and development.
• Tax compliance.
• Lead suppliers.
  (Any 2 points for 1.5 marks each = 3 marks)