Upper echelon theory argues that top managers reflect the fate of an organization. This research
examined how attributes derived from the upper-echelon theory explains the financial performance of
restaurants. The sample was derived from publicly traded restaurant companies. A top management team
(TMT) was selected as the proxy of the upper echelon. Five attributes (e.g., age, tenure, share ownership,
and stock option) are proposed to account for the performance of a restaurant. The sample is TMT at
publicly traded restaurant companies on the US stock market (e.g., NASDAQ and NYSE). The study
period was from 2000–2013, and the number of restaurant firms was twenty-nine. The number of
observations is 324. For the analysis of the panel data, this research adopted a fixed effect regression
model. The results presented that stock options had a positive impact on financial performance, whereas
age of TMTs and shared ownership had a negative effect on the financial performance. Regarding the
tenure of TMT, this research demonstrated an inverted-U-shape association to account for the financial
performance. This study additionally examined the effect of upper echelon attributes on the financial
performance depending on the organizational size. Organizational size was measured by total assets. The
results also demonstrated a positive moderating effect of size in the case of tenure, whereas this research
found a negative moderating effect of size in the case of age to account for the financial performance of
restaurants.
Key words : Upper-echelon theory, Top management team, Age, Tenure, Share ownership, and Stock
option, and Firm size