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Evidence from a U.S. quasi-natural experiment","","Economic consequences of weakening shareholder primacy are analyzed using Nevada Senate Bill 203 as a quasi-natural experiment. A difference-in-differences approach indicates affected Nevada firms suffer a firm-value decline exceeding 4% measured by Tobin’s q. Instead of strengthening governance to reassure capital providers, treated firms exhibit worsened governance. Significant real effects arise via the investment channel: treated firms pursue poorer acquisitions and show reduced efficiency in both capital expenditures and R&D. 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Governance worsens, and environmental and social performance declines, indicating stakeholder treatment does not improve.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},503240,1791294517,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":19,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":139,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":145},962085571259,"https://ap-avatar.wpscdn.com/davatar_29158cc5080c5b710cf443261637dec0","What are the costs of weakening shareholder primacy? Evidence from a U.S. quasi-natural  \nexperiment  \nFinance Working Paper N° 1064/2025  \nAugust 2026  \nBenjamin Bennett Texas Christian University René M. Stulz The Ohio State University Zexi Wang Lancaster University  \n© Benjamin Bennett, René M. Stulz and Zexi Wang 2026. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.  \nThis paper can be downloaded without charge from:  \n[https://www.ecgi.global/publications/working-papers](https://www.ecgi.global/publications/working-papers)  \nECGI Working Paper Series in Finance  \n\n| What are the costs of weakening shareholder primacy? Evidence from a U.S. quasi-natural\u003Cbr>experiment |  |\n| --- | --- |\n| Working Paper N° 1064/2025 August 2026 | Benjamin Bennett\u003Cbr>René M. Stulz\u003Cbr>Zexi Wang |\n\n© Benjamin Bennett, René M. Stulz and Zexi Wang 2026. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.  \nWe study the economic consequences of weakening shareholder primacy using Nevada Senate Bill 203 as a quasi-natural experiment. A difference-in-differences analysis shows that affected Nevada firms experience a decline in firm value of more than 4%, as measured by Tobin's q. Rather than responding with stronger governance to reassure capital providers, affected firms experience a worsening of their governance. We document significant real effects through the investment channel: treated firms undertake worse acquisitions and exhibit reduced efficiency in both capital expenditures and R&D spending. Weakening shareholder primacy does not improve how stakeholders are treated, as environmental and social performance worsens.  \nKeywords: Shareholder primacy, corporate governance, firm value, investment efficiency,  \nJEL Classification: D22, G32, G34, K22, M14  \nBenjamin Bennett  \nTexas Christian University  \nRené M. Stulz  \nThe Ohio State University  \nZexi Wang  \nLancaster University  \nFisher College of Business Working Paper Series  \nCharles A. Dice Center for  \nResearch in Financial Economics  \nWhat are the costs of weakening shareholder primacy? Evidence from a U.S. quasi-natural experiment  \nBenjamin Bennett,  \nTexas Christian University  \nRené M. Stulz,  \nThe Ohio State University, NBER, and ECGI  \nZexi Wang,  \nLancaster University  \nDice Center WP 2025-12  \nFisher College of Business WP 2025-03-012  \nAugust 2026  \nAn index to the working paper in the Fisher College of Business Working Paper Series is located at:  \n[http://www.ssrn.com/link/Fisher-College-of-Business.html](http://www.ssrn.com/link/Fisher-College-of-Business.html)  \n[fisher.osu.edu](fisher.osu.edu)  \nWhat are the costs of weakening shareholder primacy? Evidence from a quasi-natural experiment  \nBenjamin Bennett, René M. Stulz, and Zexi Wang 1  \nAugust 2026  \nAbstract  \nWe study the economic consequences of weakening shareholder primacy using Nevada Senate Bill 203 as a quasi-natural experiment. A difference-in-differences analysis shows that affected Nevada firms experience a decline in firm value of more than 4%, as measured by Tobin’s q. Rather than responding with stronger governance to reassure capital providers, affected firms experience a worsening of their governance. We document significant real effects through the investment channel: treated firms undertake worse acquisitions and exhibit reduced efficiency in both capital expenditures and R&D spending. Weakening shareholder primacy does not improve how stakeholders are treated, as environmental and social performance worsens.  \nJEL Classification: D22, G32, G34, K22, M14  \nKeywords: Shareholder primacy, corporate governance, firm value, investment efficiency, Stakeholder model, ESG  \n1 Bennett is from the Neeley School of Business, Texas Christian Un","cbCaidhGksGpouWw","https://ap.wps.com/l/cbCaidhGksGpouWw","pdf",1275338,68,"English","# Abstract\n# Introduction","[{\"question\":\"How does the paper study weakening shareholder primacy?\",\"answer\":\"It uses Nevada Senate Bill 203 as a quasi-natural experiment and applies a difference-in-differences analysis to compare affected firms with outcomes over time.\"},{\"question\":\"What is the estimated effect on firm value?\",\"answer\":\"Affected Nevada firms experience a decline in firm value of more than 4%, measured by Tobin’s q.\"},{\"question\":\"What real-economy channels and outcomes change for treated firms?\",\"answer\":\"Treated firms show worse acquisitions and reduced efficiency in capital expenditures and R\\u0026D. Governance worsens, and environmental and social performance declines, indicating stakeholder treatment does not improve.\"}]","What are the costs of weakening shareholder primacy? Evidence from a U.S. quasi-natural experiment | PDF",1791052399,171]