This study investigates the effects of related party transactions and chaebol firms on earnings management. A merged dataset of 9,200 firm-year observations from the Total Solution 2000 (TS 2000) database of the Korea Companies-Information Service (KOKOInfo) database for 1,380 firms, listed in KOSPI and KOSDAQ of the Korea Exchange (KRX) from 2004 to 2020 was used. In addition, we introduced the lagged variables to investigate the effects of chaebol firms and related party transactions on earnings management. Furthermore, since those factors have simultaneous mutual effects on each other with time lags, we introduce simultaneous equation models (SEM) with finite distributed lags of five years. The findings of this study are summarized as follows. First, chaebol firms have more severe earnings management than non-chaebol firms. Second, earnings management has a negative effect on related party transactions for chaebol firms. Third, related party transactions for chaebol firms have a negative effect on earnings management. Fourth, through simultaneous equation model analyses, we have verified the above-mentioned conclusions. Fifth, the effects of earnings management on IPO return last for years while those of chaebol firms on earnings management last for years. However, the effects of related party transactions on earnings management lasted only for a year.