We 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.