What do you believe is the single most important factor driving up the cost of living in Nigeria?

A new study finds there are two simple editing changes companies can make to their annual reports that improve investor confidence.

At issue are so-called "material weaknesses in internal control." Internal controls are practices that prevent companies from inadvertently misrepresenting any aspect of their finances in their public-facing financial statements. Material weaknesses in internal controls refer to any problems that make the internal control system less effective.

"Material weaknesses in internal controls are bad news for investors, who rely on financial statements to make investment decisions," says Joe Brazel, co-author of a paper on the work and Jenkins Distinguished Professor of Accounting in North Carolina State University's Poole College of Management.

"That's why the Sarbanes-Oxley Act requires companies to disclose the effectiveness of their internal controls. For this study, we wanted to see if the language companies use when making those disclosures has an effect on how investors respond."

"Specifically, we wanted to look at two things," Brazel says. "First, how do investors respond when companies are defensive when disclosing material weaknesses, compared to taking more accountability for the weaknesses? Second, how do investors respond when companies use first-person pronouns when discussing material weaknesses, as opposed to referring specifically to management?"

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