Is corporate social responsibility priced into Yankee bonds?

Steven X. Zhu, Kelly Cai and Hui Zhu

Finance Research Letters, 2025, vol. 71, issue C

Abstract: This paper provides the first empirical evidence that CSR enables foreign firms to secure favorable terms when obtaining capital in the Yankee bond market. Socially responsible foreign companies benefit from better credit ratings and can raise capital affordably in the Yankee bond market. Instrumental variables analyses and the entropy balance approach suggest that our findings are robust to accounting for endogeneity. Further analyses concede that the negative association of CSR with borrowing costs is more prominent for bonds with less asymmetric information. These findings suggest that U.S. investors value CSR, enabling foreign firms to access more capital at lower cost.

Keywords: Corporate social responsibility; Yankee bonds; Credit ratings; Borrowing costs; Information asymmetry (search for similar items in EconPapers)
JEL-codes: G12 G15 G31 M14 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324015034

DOI: 10.1016/j.frl.2024.106474

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