Limited Attention: Implications for Financial Reporting

I develop a theory to study the consequences of providing more detailed information rationally inattentive investors. first consider simple data-provision problem and show that adding data or detail in financial statements can make it difficult for investors extract information. Consequently, who have limited information-processing capacity may prefer less also when investors' decisions are complements, details addition summary reduce welfare. More specifically, because increased disclosure details, coordination failure could occur attention-allocation decisions. By showing lead an overload investors, this yields valuable insights accounting standard setters.