Abstract：Although a sizable literature suggests that shareholders prefer greater vulnerability to takeovers because it reduces agency problems, the threat of takeovers can also impose ex ante costs on firms by adversely affecting important stakeholders, such as major customers. In this paper, we find that for firms with corporate customers as important stakeholders, a reduction in the threat of takeovers results in better operating performance and higher stock returns, increases firms’ ability to attract new customers, and strengthens relationships with existing customers. Our results suggest that anti-takeover provisions can increase shareholder value for certain types of firms.