i) Non-financial objectives of private companies
The maximisation of long-term shareholder wealth should be the objective of all profit-seeking private companies. Often companies try to achieve this through a series of primary financial objectives. In addition to these primary financial targets, even profit-seeking private companies often have other secondary non-financial targets. Non-financial objectives could be aimed at:

• The welfare of employees. Examples of this could be health and safety in the workplace, social and recreational services, the provision of accommodation or other services, and pay and perquisites beyond what might be deemed necessary to attract and hold the appropriate staff.
• The welfare of management. Examples of this could be excessive pay and perquisites, “empire building” or increasing market share by either organic growth or through mergers and acquisition beyond what is in the best interests of shareholders for the benefit of management or not taking on risks that would be in the interests of shareholders but could jeopardise the survival of the firm and hence the welfare of the management.
• The welfare of society. Examples of this could be acting in an environmentally sustainable way, not testing products on animals, respecting human rights, being a “good neighbour,” and contributing to the local economy/community.
• The provision of a service. Examples of this could be providing a service that could not be justified on purely profit grounds such as assisting access to their products for the disabled or those in remote areas.

ii) The effect of non-financial objectives on the achievement of the financial objectives of companies can include:

• By trying to improve health and safety in the workplace, social and recreational services, the provision of accommodation, or other services and pay and perquisites beyond what might be deemed necessary to attract and hold the appropriate staff will increase costs and hence could reduce profit and dividend growth. However, the contrary is not always advisable either. Not following acceptable health and safety standards or paying below minimum acceptable or legal standards either in the customers’ markets or even where the product/service is sourced in, for example, a third-world country can be advantageous in the short term. However, it is possible that this could lead to demotivated employees and angry customers. If the company’s reputation suffers, attracting and keeping customers will be more difficult. Thus in the longer term, this could hinder achieving the financial objectives of companies.
• It would be hard to imagine how excessive pay and perquisites could be in the best interests of shareholders. Thus, this would be expected to reduce profit and dividend growth. Similarly, while management might argue that increasing market share or increasing the size of the company by either organic growth or through mergers and acquisition might be good for the shareholders, this is often not the case, (as often witnessed by the fall in the share price of a predator firm when it announces it intends to engage in the takeover of another firm). This can lead to earnings per share and dividends per share falls even though total profit and dividends may rise.
• Not taking on risks would be expected to reduce profit and dividend growth and would not be in the interests of shareholders unless it was argued that financial distress costs are higher than is usually estimated in finance theory.
• Most firms now accept that everyone has a part to play in ensuring sustainable development and reducing their impact on the environment. Also, many firms choose to help society in many other ways too such as contributing to the local economy/community, not engaging in illegal activities such as illegal pollution or bribing local and national officials. This could increase costs, particularly in the short term. Hence, it could reduce profit and dividend growth. However, it is possible that this could lead to increasing the reputation of the company. This could lead to better-motivated employees, and again attracting and keeping customers could be easier. Thus in the longer term, this could be good for achieving the financial objectives of companies.