Do firms hedge with foreign currency derivatives for employees?

Pinghsun Huang, Hsin Yi Huang, Yan Zhang

Research output: Contribution to journalArticlepeer-review

14 Citations (Scopus)


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
Issue number2
Publication statusPublished - 2019 Aug

All Science Journal Classification (ASJC) codes

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


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