What makes firms manage FX risk?

Woochan Kim, Taeyoon Sung

Research output: Contribution to journalArticlepeer-review

12 Citations (Scopus)


We examine factors that determine firms' decision to manage foreign exchange risk in an emerging market. Using survey data on the FX risk management of 223 non-financial firms in Korea, we find that firm size, a proxy for hedging costs, is the dominant factor. Consistent with this finding, firm size has stronger explanatory power for external methods than for internal methods, which have relatively lower costs. Besides firm size, export revenue is important in determining the hedging. This is particularly so for public firms, which are subject to disclosure requirements, and thus have more incentive for a stable net income stream.

Original languageEnglish
Pages (from-to)263-288
Number of pages26
JournalEmerging Markets Review
Issue number3
Publication statusPublished - 2005 Sept

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Economics and Econometrics


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