Behavioural investigation of the impact of different types of CEOs on innovation in family firms: moderating role of ownership divergence between cash flow rights and voting rights

In what way different types of CEOs within family firms, based on control diversity, behave towards R&D investment and how excess voting rights alter this behaviour of CEOs? This study has aimed to investigate the R&D investment behaviour of CEOs in family firms. This study has also investigated the moderating role of ownership divergence. The Pooled Ordinary Least Square (POLS) regression method is applied for data analysis purpose. Moreover, the Tobit regression model is also applied for robustness check. We obtained data (2008-2018) on Chinese A-share firms from CSMAR. The study found non-family CEOs exhibit negative behaviour towards R&D investment and that CEOs from family firms exhibit the same behaviour when do not have actual control rights. Family CEOs with actual control rights are more willing to R&D investment. The moderating effect of excess voting rights on family CEOs with actual control rights who change their willingness from positive to negative. The non-family CEOs and family CEOs without actual control rights show positive behaviour with existence of excess voting rights. This study is novel and pioneered the exploration of effects of different types of CEOs within family firms on R&D investment behaviour. This study is useful for directors to understand and select a suitable CEO for their firm, also for managers to devise an optimal level of ownership discrepancy to attain maximum benefits from R&D investment decisions.