We also re-estimate the relation between exchange-rate exposure and currency
derivative use for the sample of S&P 500 non financial firms that disclosed currency
derivative use in their 1992 annual reports (Regression 3, Table 3). Similar to our
base-case regression, we estimate firms’ exposures using a three-year period (1991–
93) and the J.P. Morgan dollar index. Our results, which suggest that currency derivatives
are used for hedging, extend to the 1992 sample, as the use of currency derivatives
significantly reduces firm exchange-rate exposure. In this sample, the ratio of
foreign sales to total sales is also positively related to a firm’s exchange-rate
exposure, but is not statistically significant.