This study examined the impact of institutional ownership on firm performance in the restaurant industry during 1999-2003. Taking into consideration the endogeneity of ownership structure, the relationship between the two was investigated in a simultaneous framework, and institutional ownership was found to be a significant and positive determinant of firm performance measured by proxy Q. In the meantime, financial institutions tend to invest in better performing, larger, and more profitable restaurant firms with lower financial leverage. Results support a positive endogenous relationship between institutional ownership and firm performance in the restaurant industry.
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