Transferring wealth of firms to the controlling shareholders by giving jobs to their related parties has become a big social issue. This phenomenon is universal in the advertising industry, and it has become a problem in various aspects such as inhibition of fair competition. This study empirically verifies the existence of socially controversial favoritism in subcontracting, using advertising and other discretionary expenses data of large company groups. We also examine whether the controlling share holding ratio of an advertising agency influences the favoritism in contracting for it if it is owned by a large corporate group or its controlling shareholders personally. The results of this study are as follows: First, the firms of a conglomerate with an advertising affiliate increase their advertising expenditures more for sales increase and reduce it less for sales decrease than other firms. Second, the firms of a conglomerate with an advertising affiliate increase their advertising expense more than other selling and administrative expenses for sales increase and their advertising expense are stickier than other expenses. This might be because the managers use discretionally pre-designated private contracts or internal dealings to give favors to their advertising affiliates. Third, in the sample group of the firms with a high ratio of advertising expenses to the sales, their advertising costs are less reduced and the other expenses more reduced as the controlling shareholders' stake in the advertising affiliates increases. For the firms with a low ratio of advertising expenses to sales, the controlling shareholder ownership of advertising affiliates does not affect advertising expenses nor other expenses. This study is meaningful in that it empirically demonstrates the favoritism in advertising contracts through the cost behaviors of advertising expenses and other selling and administrative expenses.