Abstract
This paper investigates the intragroup flows of brand royalties within large Korean business groups, known as chaebols. We find that business group member firms pay a greater amount of brand royalties when the associated business groups adopt a holding company governance structure, consistent with the bitter denunciation that chaebols transfer wealth from member firms to holding companies over which they have direct control. However, member firms pay a smaller amount of brand royalties when their related party transactions (RPTs) are monitored by a designated RPTs committee on the board of directors. The results suggest that the monitoring of RPTs is effective in mitigating the alleged unethical wealth transfer via brand royalties of large business groups.
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