We study how stakeholder orientation impacts firm management and performance. We exploit

state-level law changes governing the conversion of hospitals from nonprofit to for-profit and find that for-profit orientation reduces hospital spending on emergency rooms and Medicaid patients, while increasing focus on revenue and a↵ecting investment decisions. Consistent with spillovers, nonprofit hospitals located near converting hospitals experience increased emergency room visits and expenditures. We investigate governance channels that align corporate behavior with stake-holders and find that converted for-profit hospitals adjust their boards by replacing MDs with MBAs, and that the tax code is a major source of governance for nonprofits.