In this paper, we examine the investment decisions of family businesses at the firm level. Specially, by extracting the value of inefficient investments from a series of OLS regressions, we test the influence of family governance factors on inefficient firm investments. We find that inefficient investments are common among family firms, and that the number and extent of underinvestments are higher than that of overinvestments. We further discover that a large percentage of family members on the board and family member CEOs reduce both overinvestments and underinvestments, whereas the performance of founders on the board exaggerates both a business’ underinvestments and overinvestments. Finally, free cash flows tend to cause overinvestments, and reduce underinvestments. Our findings indicate that family-related governance factors influence a firm’s investment decisions, both in terms of overinvestment and underinvestment.