Abstract: The Chinese family businesses are at the turning point of transformation, and the governance issues and decision making risks are the key impediments to their development. In order to explore the governance role of internal control in family businesses’ inefficient investment, this paper uses 2010-2013 sample data from listed family businesses to systematically study the relationship between the inefficient investment and the internal control from the unique perspective of internal control. The study combines the micro internal control with the macro corporate governance by introducing the managerial distribution factors in view of family business characteristics. The result shows that in the same circumstances, the internal control effectively restrains inefficient investment. This observation is particularly applied to the businesses with concentration of managerial power in contrast with those with decentralization of managerial power. In addition, such inhibitory effect can be enhanced significantly when family members acting as top managers. In turn, such inhibitory effect is non-significant in the businesses with non-family managers.