Using a unique, comprehensive data set from a survey on corporate governance practices among Korean listed firms, we find that firms with sound governance practices are associated with both high firm value and high dividend payout ratios. Although high in firm value, firms in major business groups (or chaebol) have lower dividend payouts on average than independent firms do. This relationship is driven primarily by the corporate governance sub-components of poor shareholder protection and the relatively weak role of chaebol firms’ boards of directors. Our evidence suggests that the entrenched control by chaebol firm owners stemming from the control rights much above the cash flow rights puts less weight on protecting the minority shareholders and distributes less corporate wealth to shareholders.