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The fringe benefits of fringe benefits: When firms borrow from their retirement providers

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  • Kasten, Connor L.

Abstract

I test whether retirement plan providers extend preferential corporate loan terms to firms that have an overlapping retirement plan relationship. I find that loans from affiliated retirement plan providers (i.e., relationship loans) have lower spreads than non-relationship loans. Relationship loans are also larger and exhibit longer maturities. These terms benefit shareholders without sacrificing the quality of retirement plans available to employees. The favorable terms within this banking relationship are most likely explained by the ability of retirement plan relationships to alleviate information asymmetries in the corporate loan market rather than a quid pro quo arrangement.

Suggested Citation

  • Kasten, Connor L., 2024. "The fringe benefits of fringe benefits: When firms borrow from their retirement providers," Journal of Corporate Finance, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:corfin:v:87:y:2024:i:c:s0929119924000579
    DOI: 10.1016/j.jcorpfin.2024.102595
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    More about this item

    Keywords

    Retirement plans; Retirement providers; Employee benefits; Corporate loans; Cross-selling; Information asymmetry; Quid pro quo; Relationship banking;
    All these keywords.

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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