With a market economy not yet fully mature or yet to fully function, the “chaebol” issue is a major problem for the Korean economy. A prime example of the dilemmas related to the chaebol system is internal trading, conducted, in particular, by the owner families to siphon away corporate profits.

According to the findings of this study obtained through statistics analyses, chaebol affiliates with a high level of share ownership by the owner families are more prone to internal trading, and the profit margin is significantly large. This strongly implies that there is a transfer of wealth from chaebol affiliates with a low level of share ownership by the owner families to those with a high level. It is, therefore, statistically reasonable to suspect that the owner families are seeking personal gains through internal trading.

To regulate illegal internal trading practices, public regulatory measures should be scaled down in the long-term, based on the premise that relevant systems will operate at an optimum level. Private enforcement should also be strengthened. For now, however, given the prevalence of internal trading by the owner families, the regulatory measures should be maintained via the government’s administrative capacity.

Preface
Executive Summary

Chapter 1 Introduction

Chapter 2 Literature Review and Key Issues
　Section 1 Review of Previous Studies
　Section 2 Motivations for Internal Trading
　Section 3 Key Issues in Internal Trading Regulations

Chapter 3 Current State of Internal Trading Among Chaebol
　Section 1 Basic Information
　Section 2 General Overview of Business Groups
　Section 3 Current State of Internal Trading
　Section 4 Internal Trading and Profitability of Business Groups
　Section 5 Relationship Between Corporate Ownership Structure, Internal Trading, and Corporate Profits: Regression Analysis
　Section 6 Conclusion

Chapter 4 Regulation Under the Fair Trade Act
　Section 1 Current Legal Framework
　Section 2 Law Enforcement Performance
　Section 3 Evaluation and Improvement Measures

Chapter 5 Regulation Under Corporate Law
　Section 1 Key Legal Provisions
　Section 2 Trends in Law Enforcement
　Section 3 International Cases
　Section 4 Conclusion: Evaluation and Improvement Measures

Chapter 6 Summary and Policy Recommendations
　Section 1 Current State of Internal Trading
　Section 2 Policy Recommendations

Supplementary Discussion
References
Appendix
ABSTRACT