In this paper we empirically analyze the demand for hedging instruments in Taiwan. The results indicate that firm size is the most important factor, larger firms are more likely to use hedging tools. Generally speaking, firms which have larger size, lower board of directors ownership, shorter history, lower risk, and higher percent of foreign exchange profit/loss to EBIT, are more likely to engage in risk hedging. Our result is consistent with the hedging economy of scale hypothesis as well as the signalling hypothesis. In addition, we also examine whether the sensitivity of firm value to exchange rate differs between hedge firms and non-hedge firms, the result suggests that hedging does not matter.