One of the primary types of intangibles is human capital. A contextual variable that may influence the relation between human capital and the use of performance measures is the firm’s pay structure (Levine, 1991). In the next two subsections, I draw on both agency and equity theory to develop the hypotheses. The next section discusses agency theory and the informativeness principle. The second section brings in the notion of equity theory. In each section related papers are discussed and the hypotheses are developed. The hypotheses are illustrated in Fig. 1.