Effect of top management team attributes on American restaurant financial performance

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.