01320nas a2200145   4500008004100000245007900041210006900120260000900189300001200198490000700210520086000217653001501077100001801092856006401110       2020                        eng d00aForeign Exchange Risk, Hedging, and Tax-Motivated Outbound Income Shifting0 aForeign Exchange Risk Hedging and TaxMotivated Outbound Income S  c2020  a953-9870 v583 aAlthough outbound income shifting to low‐tax jurisdictions provides tax savings, it is often accompanied by nontax costs. In this study, I examine whether foreign exchange (FX) risk constrains tax‐motivated outbound income shifting by U.S. multinational corporations. My findings indicate that exposure to greater currency volatility is associated with less outbound income shifting, and this effect is stronger for firms with foreign affiliates using foreign functional currencies. I also investigate whether hedging facilitates outbound income shifting. Consistent with hedging lowering costs associated with exchange rate volatility, I find that U.S. firms that use more currency derivatives tend to shift more income to low‐tax foreign jurisdictions. Overall, these findings suggest that FX risk is an important cost of outbound income shifting.10aAccounting1 aDeng, Junfang  uhttps://onlinelibrary.wiley.com/doi/10.1111/1475-679X.12326