In contrast to existing work that focuses on independent firms, we examine earnings management behaviors of firms affiliated with business groups, using unique dataset for Korean chaebols for 1993- 2007. Contrary to predictions of agency theory, we find that group firms are actually less engaged in earnings management than non-group firms, and we offer controlling family’s concern for group reputation as explanations. Group firms also are shown to use more real cash flow-based earnings management than discretionary accruals management. The results are robust with respect to the method of control sample construction, alternative models and group definitions, and endogeneity. There is also evidence that corporate reforms undertaken in the aftermath of the Asian financial crisis, including regulations on audit and consolidated group-wide financial statements, appear to have mitigated the use of earnings management by group firms. These results are consistent with the notion that concern on group reputation may mitigate agency-based opportunistic earnings management behaviors.