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Sadeen Ghafoor,1 Muhammad Zulfiqar,2 Man Wang,1 Chunlin Wang,3 Md Rashidul Islam4 1School of Accounting, Dongbei University of Finance and Economics, China and China Internal Control Research Center, Dalian, Liaoning, People’s Republic of China; 2Department of Management Sciences, Khwaja Fareed University of Engineering and Information Technology, Rahim Yar Khan, Pakistan; 3School of Economics, Management & Law, Shenyang Institute of Engineering, Shenyang, Liaoning, People’s Republic of China; 4Department of Business Administration, East West University, Dhaka, BangladeshCorrespondence: Chunlin Wang, Email wangchunlin0227@126.comPurpose: The novel study describes the behXavioural phenomena of family firm types and explores the relationship between the family firm types of control diversity and Research and Development (R&D) investments. Acquiring controlling rights is a psychological phenomenon for family firm owners. The moderating effect of CEO compensations on R&D investments is investigated.Methodology: We collected data of listed A-share family firms in China from 2011 to 2020 in the China Stock Market and Accounting Research database. We used Tobit regression for data analysis.Results/Finding: The study concludes that lone-controller family firms (LCFFs) are less willing to invest in R&D and multi-controller family firms (MCFFs) have positive behaviour towards R&D. The moderating role of CEO compensation deviates the willingness and behaviour to invest in R&D.Conclusion/Originality: To the best of our knowledge, this study is the first to outline the paradoxical empirical evidence on family firms and R&D investments by analysing control diversity and how the moderating role of CEO compensation nexus can alter willingness towards R&D. The study is a novel attempt following De Massis et al’s framework to test the willingness and ability of LCFFs and MCFFs. Previous studies based on agency theory have tacitly assumed that ability and willingness exist in family-controlled firms. However, this study challenges this implicit assumption.Keywords: family firms, control diversity, R&D investment, CEO compensation, behavioural agency model |