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Is corporate social responsibility priced into Yankee bonds?

Author

Listed:
  • Zhu, Steven X.
  • Cai, Kelly
  • Zhu, Hui

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.

Suggested Citation

  • Zhu, Steven X. & Cai, Kelly & Zhu, Hui, 2025. "Is corporate social responsibility priced into Yankee bonds?," Finance Research Letters, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324015034
    DOI: 10.1016/j.frl.2024.106474
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    More about this item

    Keywords

    Corporate social responsibility; Yankee bonds; Credit ratings; Borrowing costs; Information asymmetry;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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