Is corporate social responsibility priced into Yankee bonds?

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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.