First, it appears that firms are using non-financial measures to focus top executives’ attention on the
firm’s long-term, strategic objectives. Second, when choosing measures to include in a reward system,
it is important to consider contextual factors such as the pay structure. This study also provides insights
to researchers who evaluate and attempt to understand the use and design of performance measurement
systems. An important theoretical implication is that agency theory, at least in this setting, is incomplete.
To gain a more complete understanding of the use of performance measures in contracting, researchers
should consider multiple theories of behavior.