This study investigates the factors that determine to derivatives use of firms. We consider seven factors as determinants of hedging with derivatives; firm's financial distress risks, liquidity, bond contracting costs, managerial incentive compensation, corporate tax schedule, foreign exchange risks, discretionary accruals. We used notional amount of derivatives as dependent variable and we divided the determinants of hedging with derivatives into two categories; endogenous factor and exogenous factor. Therefore, we performed path analysis to examine hypotheses about the factors. Also, we performed logistic analysis to compare the result with prior research. We draw the following results; First, firms with lower financial distress risks or lower liquidity are more likely to use derivatives. Second, firms hedge to reduce expected tax liabilities. Third, firms with higher foreign exchange risks are more likely to use derivatives. Forth, hedging with derivatives and discretionary accruals has negative relationship but we can find a partial evidence, not a perfect evidence, of this relationship.