The purpose of the paper is to understand the motivation of the internal transactions among the member firms of Korean conglomerates by investigating their determining factors. Using the transaction data for the periods of 1997 to 2003, we find that debt guarantees are mainly used for the purpose of propping financially weak member firms, while illegal internal transactions are mainly used for the purpose of tunneling corporate wealth from minority shareholders to controlling shareholders. The results suggest that controlling shareholders are willing to suffer financial loss in the short run to support their member firms. We also find that the pyramidal structures of conglomerate groups affect the decision on internal transactions.