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My dissertation focuses on relevance of accounting information and models of rational inattention. Rational inattention suggests investors have limited attention spans and need to decide how to allocate their time. In the first part of my dissertation, I suggest that investor inattention provides an indirect incentive to managers for increasing relevance of accounting information. The second part suggests that managers can affect relevance of accounting information through accounting conservatism. In the context of rational inattention, I prove that accounting conservatism can increase long term value of the firm and make accounting information more relevant for predicting future earnings. In the third part, I look at how differences in information processing costs of investors in a rational inattention setting impacts information captured by price and I use this to offer an explanation for price movements following financial disclosures and announcements.