Does corporate social responsibility facilitate credit ratings: Evidence from Rule 144A bonds

• Rule 144A issuers with higher CSR performance receive better initial credit ratings. • Foreign Rule 144A issuers with higher CSR receive favorable initial credit ratings. • CSR can reduce information asymmetry or risk, granting firms better credit ratings. • Rule 144A issuers with better CSR performance can borrow more debt at a lower cost. We investigate how corporate social responsibility (CSR) influences the initial credit rating of Rule 144A bonds. Our findings indicate that socially responsible issuers are rewarded with better initial ratings. This result persists even for each environmental, social, and governance component. We further show that foreign issuers with strong CSR receive more favorable initial ratings than their domestic peers. Additionally, issuers with higher CSR can issue larger amounts at lower borrowing costs. Results from instrumental variables and entropy balance analyses show robustness accounting for endogeneity. Our findings suggest that CSR efforts are recognized and rewarded in the Rule 144A market.