Do firms hedge with foreign currency derivatives for employees?

Ping-Hsun Huang, Hsin Yi Huang, Yan Zhang

Research output: Contribution to journalArticle

Abstract

Using a sample of 3004 US firm-years with foreign sales, we provide the first evidence that a firm's employee treatment score is an important determinant of its fraction of foreign sales hedged with currency-based derivatives. The positive relation between employee treatment rating and currency hedging activity is driven by firms operating in competitive industries, businesses with relatively unique products or assets, and companies adopting aggressive business strategies. These results suggest that firms with foreign sales tend to factor employee benefits in their currency hedging policies when their acquisition, development, and retention of human capital are especially costly or highly valued.

Original languageEnglish
Pages (from-to)418-440
Number of pages23
JournalJournal of Financial Economics
Volume133
Issue number2
DOIs
Publication statusPublished - 2019 Aug 1

Fingerprint

Derivatives
Foreign currency
Employees
Hedge
Currency hedging
Employee benefits
Business strategy
Assets
Employee relations
Currency
Industry
Factors
Rating
Human capital

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management

Cite this

Huang, Ping-Hsun ; Huang, Hsin Yi ; Zhang, Yan. / Do firms hedge with foreign currency derivatives for employees?. In: Journal of Financial Economics. 2019 ; Vol. 133, No. 2. pp. 418-440.
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Do firms hedge with foreign currency derivatives for employees? / Huang, Ping-Hsun; Huang, Hsin Yi; Zhang, Yan.

In: Journal of Financial Economics, Vol. 133, No. 2, 01.08.2019, p. 418-440.

Research output: Contribution to journalArticle

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