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.

Non-compete agreements (NCAs) limit outside employment options and, therefore, increase personal costs of job displacement for managers. Using state-level changes in NCA enforceability as a natural experiment, we find that managers are more averse to horizontal takeovers when NCA enforcement tightens. In particular, higher enforceability is associated with fewer same-industry takeovers. Those that do materialize are more likely to be hostile, involve higher premiums, and are less likely to complete. Overall, the findings indicate that the use of NCAs and their enforceability have important implications for the market for corporate control and that banning NCAs could actually promote consolidation.

We pose a structural model of the managerial labor market with general and firm-specific human capital accumulation, managerial bargaining power, and imperfect labor market competition. Empirically, firm-specific skill drives wage growth and variability over careers; it also restricts mobility and helps explain the low rate of external CEO hiring. We decouple bargaining power from labor market competition in managerial rent extraction, with competition accounting for a substantial share, especially for poached CEOs. Firm-specific skill accumulation increases match productivity between firms and managers, shaping the dynamics of rent extraction by raising rent growth over tenure while dampening it over experience.